A lawmaker on Monday called on credit card companies to scrap "unwanted" and "burdensome" surcharges following the recent passage into law of a measure installing a credit information system.
Citing Republic Act 9510 or the Credit Information System Law, Cebu Representative Eduardo Gullas urged 15 member firms of the Credit Card Association of the Philippines (CCAP) to immediately remove annual membership fees and extra charges on late payments.
"Issuers no longer have any excuses to continue penalizing credit card holders with no oppressive extra fees and charges, now that we have a new law enabling them to ferret out bad creditors and effectively reducing transaction costs," Gullas said in a statement.
Signed by President Arroyo last October 30, RA 9510 creates the Credit Information Corp. (CIC), which would ease credit processing and lessen transaction costs for credit card issuers, lenders as well as clients. The new credit information system is also expected to minimize the risk of defaults, with CIC providing standardized information on the credit history and financial condition of potential borrowers.
The CIC would be 60 percent owned by the national government, while the remaining 40 percent will belong to qualified private institutional investors such as industry groups of banks, quasi-banks, and other credit-related associations.
Gullas reiterated that local issuers have been punishing consumers with needless fees.
Apart from annual fees and late payment charges, he said, credit card firms charge users an annual interest rate of up to 42 percent, which is almost four times the 11 percent being assessed by card issuers in the US. In other words, credit card companies in the country charge a 35 percent monthly interest, a huge amount compared to 0.91 percent in the US.
"Also, in the US and other countries, card issuers do not impose annual membership fees. Here, issuers collect anywhere from P750 to P1,200 per principal cardholder, plus an extra P500 for every supplementary cardholder. This is outrageous," Gullas said.
According to the Bangko Sentral ng Pilipinas, credit cards account for 5.5 percent of the total loan portfolio of banks, with credit card issuers reporting a total of P106 billion in receivables as of September, up 22.6 percent from a year ago. This is because more than five million Filipinos routinely use credit cards and the number is growing around 10 percent yearly.
source : http://www.abs-cbnnews.com
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