Solon seeks lower credit card penalty interest
MANILA, Philippines - Quezon City Rep. Winnie Castelo has filed House Resolution 474 that seeks to slash credit card penalty interests.
The resolution wants credit card holders with debts, delinquencies, or defaults in payment to be charged with what is equivalent to only a monthly interest rate of 1% and monthly penalty rate of 1%.
This is a departure from market-prevalent scheme of credit card companies that benefit from the imposition of interest of 3% per month and an additional penalty fee equivalent to another 3% per month slapped against card holders found delinquent in their monthly payments on credit card usage.
The joint resolution prescribes a straightforward interest rate pegged at 12% per annum.
It also prescribes that a corresponding penalty rate of only 12% per annum may be imposed by credit card companies or their affiliate banks.
"There is a need of a firm legal basis to tame credit card companies [to] exercise a little bit of their corporate social responsibility,” Castelo emphasized.