QC solon wants interest rate on credit cards pegged PDF Print E-mail
Wednesday, 10 November 2010 10:44

As Congress resumes session Monday, a Quezon City legislator said he filed a Joint Resolution that would prescribe the rate of interest that all credit card companies may impose to their cardholders.

Quezon City Rep. Winnie Castelo said a firm legal basis is needed to "tame" credit card companies in exercising part of their corporate social responsibility.

With this congressional course of action, he said, credit cardholders with debts, delinquencies or defaults in payment may be charged with what is equivalent to a monthly interest rate of one percent and monthly penalty rate of one percent only.

Castelo said the move dramatically departs from market-prevalent scheme of credit card companies that benefit from the imposition of interest of three percent per month and an additional penalty fee equivalent to another three percent per month slapped against cardholders found delinquent in their monthly payments on credit card usage.

"When millions of credit card holders have become victims rather than beneficiaries of a corporate business scheme that has been quite unregulated for a long, long time, it behooves upon Congress to apply the brakes," he said.

Castelo said this is exactly what he had in mind when he first filed House Resolution No. 474 prior to the Joint Resolution that he filed very recently.

In the earlier HR 474, Castelo, in the context of a mere moral suasion, urged the concerned House Committee to look into this concern so that the appropriate agency of government would closely monitor the collection practices of several credit card companies.

This time, however, to put more teeth into the original congressional option, the Quezon City lawmaker said he filed a Joint Resolution so it would have the force of law once adopted and approved by both Chambers of Congress -- the House of Representatives and the Senate.

Under the Joint Resolution, it is straightforwardly prescribed that interest rate shall be pegged at 12 percent per annum. It also prescribes that a corresponding penalty rate of only 12 percent per annum may be imposed by credit card companies or their affiliate banks.

"This congressional action has clear historical moorings on existing laws such as Republic Act No. 2655 (also known as the Usury Law), RA 3765 (also known as the 'Truth in Lending Act'), Articles 21 and 1229 of the Civil Code, Central Bank Circular No. 905-82, the 2009 'Macalinao vs. Bank of Philippines Islands case' the UP alumnus opines," said Castelo.

"Our resolve should not be taken as a bold move from the State since there are sufficient laws that truly apply the brakes and that can in fact even make certain credit card companies liable given certain attendant facts and circumstances in their credit card transactions," he said.