Opposition Sen. Chiz Escudero yesterday urged credit card companies to cut interest rates, especially those incurred by parents to pay school tuition, after the Bangko Sentral lowered key interest rates for the 5th time last since December 2008.
"The failure of these credit card firms to respond to the BSP rate cuts brings to mind what Mr. Jun Lozada was once told by a ranking official: moderate their greed," the 39-year old lawmaker said.
"They should at least consider substantially decreasing rates for tuition loans at this time, and even waive other charges and fees," Escudero, who is chair of the Senate committee on banks, said.
The Bangko Sentral reduced key policy interest rates last May 28 by another 25 basis points to 4.25 percent for overnight borrowing and 6.25 percent for overnight lending -- the fifth rate cut since December 2008.
With inflation slipping further to an 18-month low of 3.3 percent in May from 4.8 percent in April, the Bangko Sentral is expected to have more room for lowering rates.
There are about 6.5 million credit cards held by four million users in the country, according to data from the Credit Card Association of the Philippines (CCAP). Credit card receivables reached P130.billion last year, P15 billion of which turned out to be bad accounts.
At present, the lowest interest rate among credit card companies is at 2.5% while the highest is at 3.5%.
Escudero said that credit card companies have been aggressively promoting the use of cards to pay tuition fees, knowing the difficulties being faced by families in these times.
"To erase the perception that they have become ambulance chasers, these credit card firms should ease rates to reflect the impact of the BSP cuts on market rates," he said.
Escudero has filed Senate Bill 1438 (SB 1438) seeking to put a ceiling on the interest rates and surcharges being levied by credit card companies, as well as prohibiting the practice of including hidden charges in the billing process of these firms.
The bill puts a cap of 1 percent per month or 12 percent per annum on the interest rates that can be charged by credit card companies. It also seeks to put a ceiling of 1 percent on the surcharges and penalties imposed by these firms.
"The state has to come in to regulate the interest rates charged by these companies so that a healthier economic environment will prevail for the benefit of the consuming public and the credit card company.
The senator said he is looking into the possible reinstatement of the Anti-Usury Law which was suspended by the Central Bank in 1982.