House bill to protect credit card users passed
MANILA, Philippines - The House of Representatives has passed a measure aimed at protecting consumers from incurring excessive debt from credit card use.
On June 8, the lower house passed House Bill 4655 on third and final reading, with no objection from Congress, before reopening for the second session in late July.
Speaking on ANC's "Headstart," House Deputy Majority Leader and Pasig City Representative Roman Romulo, who authored the bill, says it aims to educate consumers on the status of their credit spending and prevent possible abuse from credit card companies.
While credit cards help consumers bridge their expenses, Romulo notes, they want to make sure users are properly informed of their liabilities.
"Kahit pangkaraniwang mamamayan nasanay sa credit card, it has become part of their budget process. Pag hindi nabayaran nagugulat sa next billing nila, pag di nabayaran, may interest, may penalty, dagdag ng dagdag. Iyon ang gusto nating ma-address sa House bill na ito."
Under the measure, credit card companies are compelled to inform credit card holders of their accumulated dues, penalties and additional interests in their monthly billing statement.
The additional information include:
- the number of months (rounded to the nearest month) that it would take to payoff the entire amount of the outstanding balance, if the consumer pays only the required minimum monthly payments and if no further advances are made;
- the total cost, including interest and principal payments, of paying that balance in full, if the consumer pays only the required minimum monthly payments and if no further advances are made;
- the monthly payment amount that would be required for the consumer to eliminate the outstanding balance in 36 months, if no further advances are made; and
- the total cost to the consumer, including interest and principal payments, of paying that balance in full if the consumer pays the balance over 36 months.
The bill requires banks to add a cautionary note, warning consumers that their remaining balance will incur interest.
"Baka mangyari sa ating mga mamamayan, maging masyadong loose sa paggamit ng credit card, kaya kailangangang maliwanag sa billing, makita nila yung true cost sa credit card. Gusto natin magkaroon ng fair warning, para pag-isipan nila, think twice before using a credit card."
"May warning tayong ilalagay stating na pag binayaran yung ganitong amount, yung balance will be subject to interest and penalty at dahil doon aakyat yung interest payments in absolute terms."
"More important than that, gusto natin maglagay sila ng table sa billing statement. Lalabas ng maliwanag doon magkano kung minimum ang binabayad mo, magkano ang interest per month, at penalties if ever, para macompare mo magkano yung principal."
"We require them further na kung mababayaran yung original principal amount, magkano yung interest, at total para macompare."
Romulo notes they sought the protection of consumers as lenders are capable of protecting themselves, even going to the full extent of recovering dues from non-payment of credit, by claiming attached properties of their customers.
Romulo adds there are provisions in the law to force consumers to pay their obligations to credit card companies.
Romulo says the bill also seeks to place all credit card companies under the direct supervision of the Bangko Sentral ng Pilipinas (BSP).
Non-banks issuing credit cards are currently under the supervision of the Securities and Exchange Commission (SEC).
"First of all, we will know if credit card issuers are complying with the law. Second, we will know the total debt, and it will be easier for us to make the right policies, and craft better legislation."
In crafting the bill, Romulo says they sought to find a balance between educating consumers, and promoting transparency and fairness in bank transactions.
"Balancing of interests ito: kailangan natin maprotektahan ang consumer, pero ayaw natin matighten yung credit. Ang ginawa natin fair warning lang sa consumers para maeducate sila, pero kung hindi gagawin ng credit card company ang paggawa ng warning, may penalty ang credit card issuer, dun natin pini-peg yung inerest na 1% pag hindi sila nagcomply."
He notes the Supreme Court has ruled on the matter of interest rates. "Mayroon nang decision ang Supreme Court tungkol sa interest rate. Pag medyo inequitous yung pinapatong na interest rate, pwede babaan ng korte."
A counterpart measure, filed by Senator Miriam Defensor Santiago, has been pending at the Senate committee on banks, financial institutions and currencies, since September 7, 2010.
But ultimately, Romulo says, even with the help of such pieces of legislation, consumers must empower themselves by using credit cards responsibly.