Credit card industry renews call to scrap caps on interest rates, fees

MANILA, Philippines — The local credit card industry is renewing its push to persuade regulators to lift caps on fees and interest rates, saying controls imposed during the pandemic are no longer needed as the economy normalizes.

Alex Ilagan, executive director of the Credit Card Association of the Philippines (CCAP), said the group was awaiting a decision from the Monetary Board, the highest policy-making body of the Bangko Sentral ng Pilipinas (BSP), on a position paper submitted last year.

The proposal calls for the removal of pandemic-era cap on finance charges, contending that pricing should be set by market forces rather than regulation.

“We feel that the market will eventually determine what’s the best rate,” Ilagan told reporters. “In the past, it’s always been market-driven because there will be competition. So, some banks will lower theirs, some will increase.”

READ: Bank lending up 10.3% in November despite subdued confidence

Temporary measure

The Monetary Board last addressed the issue in August 2023, when it opted to retain existing ceilings on credit card transactions. The limits were imposed by the central bank as a temporary relief measure during the COVID-19 pandemic to ease the financial burden on consumers and preserve access to affordable credit.

READ: Credit card users get lift as BSP keeps rate cap

Under the rules, interest or finance charges on unpaid credit card balances are capped at 3 percent a month, or 36 percent annually, while monthly add-on rates on installment loans are limited to 1 percent. Processing fees on credit card cash advances, meanwhile, are capped at P200 per transaction.

READ: BSP raises interest cap on credit card transactions to 3% per month

At the time, BSP Governor Eli Remolona Jr. said the decision was intended to strike a balance between maintaining steady borrowing costs for consumers and ensuring the long-term viability of banks and credit card issuers.

But Ilagan said the industry believes those limits have outlived their purpose. “We feel that a cap is unnecessary at this point,” he said. “There’s no more pandemic.”

Industry data

Credit card receivables in the Philippine banking system reached P1.1 trillion pesos as of September 2025, according to latest central bank data, up 29 percent from a year earlier.

Of that total, P52.7 billion were classified as nonperforming—debts unpaid for at least 90 days and at risk of default—accounting for 4.82 percent of total credit card receivables and 9.45 percent of the banking sector’s nonperforming loans.

A separate survey of CCAP members showed 18.5 million outstanding credit cards as of the fourth quarter of 2025, up 12 percent from a year earlier.

Ilagan said growth could accelerate this year as financial technology firms expand lending offerings, including buy-now-pay-later products.

“It will probably grow faster because, you know, there’s more competition coming in,” Ilagan said, adding that fintech players could broaden the market by drawing first-time borrowers into the formal credit system, many of whom may eventually upgrade to traditional credit cards.

“So, we don’t really look at them as a direct competitor. They’re enhancing the market for us,” he said. /dda