Published 14 August 2020, The Daily Tribune

A credit card owner and millions of others contribute to a global billion-dollar industry. It comes as no surprise that the use of credit card has gained popularity in the Philippines even among young, inexperienced cardholders. But as most indiscriminate swipers would learn, a day of reckoning — of monthly payments — definitely comes.

As the demand for credit cards increased, the collection practices of some credit card providers also became more aggressive. Missed payments became frowned upon; tales of collection agents posing as law enforcers demanding immediate payment of minimum amount dues became familiar. The need to protect consumers and card owners became more imperative, prompting the legislation of the Philippine Credit Card Industry Regulation Law or Republic Act (RA) 10870. Soon, the country’s central monetary authority, the Bangko Sentral ng Pilipinas (BSP) Monetary Board, followed suit by issuing the Guidelines on the Establishment and Operations of Bank and Non-Bank Credit Card Issuers to implement RA 10870. The Guidelines aim to make consumer credit readily available under conditions of safe, sound, efficient and fair business conduct aligned with global best practices.

With these regulations, gone are the days where pre-approved credit cards will arrive in the mail. It is doubtful that scrupulous practices of agents “waiving” proof of income to attract applicants will continue under the regulations. Most importantly, previously unchecked aggressive collection practices, bordering on harassment, are no longer tolerated.

The key measures are:

1. The credit limit to be extended to the cardholder shall be strictly based on the credit standing and financial capacity of the cardholder.

2. Fees, interests and charges must be disclosed to the cardholder. A reminder to the cardholder in the billing statement, or its equivalent document, that payment of only the minimum amount due or any amount less than the total amount due for the billing cycle/billing period would mean the imposition of interest and/or other charges must be given. A written statement in the following form must be printed in the billing statement: “lmportant Reminder: Paying less than the total amount due will increase the amount of interest and other charges you pay and the time it takes to repay your balance.”

3. Finance charges and other fees arising from nonpayment in full or on time of the outstanding balance shall be based on the unpaid amount of the outstanding balance.

4. If the payment due date falls on a weekend and regular national holidays, the payment due date shall be automatically moved to the next business day and payment thereon shall not be treated as late payment.

5. Credit card issuers, their officers, employees and agents shall keep strictly confidential the data on the cardholder, except under some conditions.

6. A credit card issuer shall give cardholders up to 30 calendar days from statement date to report any error or discrepancy in their billing statement. The credit card issuer shall take action within 10 business days from receipt of such notice.

7. A cardholder may cancel or terminate his/her account anytime; provided, that the cardholder either pays in full or enters into another agreement for payment of the outstanding balance and new purchases, debits and deferred installments payment may be made either through a one-time payment or on installments within a fixed period of time.

Any person found to be in violation may face imprisonment from two months to 10 years, and/or a fine. In addition to the administrative and criminal sanctions that may be imposed, the authority of the credit card issuer to issue credit cards may be suspended or canceled by the BSP.

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