SEN BONG REVILLA WANTS TO REGULATE CREDIT CARD CHARGING

SENATOR Ramon Bong Revilla Jr. today pushed for legislation that will govern credit transactions, specifically credit cards, to protect the economic interest of the people.

According to Bong Revilla, there has been a steady increase of credit card use since it was introduced to Philippine market in the 1970s.

"Republic Act 8484 is limited and it only regulates the issuance of access devices. Senate Bill 2492 amends the 11-year-old law. It will provide more transparency on the part of credit card companies to ensure that the consumer is more aware of the scope of his debt/obligations. It also seeks to regulate the interest rates charged by the companies and prohibit hidden charges on credit card transactions," the senator stated.

Bong Revilla said banks and card issuers often use Central Bank Circular 905-82 in charging their customers more than one percent on interest rates. The circular, which was issued in 1982, effectively removed the ceiling on interest rates for both secured and unsecured loans.

"Under the proposed bill, the interest rates on any credit purchases and cash advances made through such facility shall in no case be higher than one percent per month or 12 percent per annum, without compounding. Surcharges or penalties shall be limited to a ceiling of one percent per month, without compounding," Bong Revilla said as he cited part of the proposed bill.

He added that the lack of specific regulations on finance charging has been the subject of legal battles between the banks and its cardholders before the Philippine courts. He cited Supreme Court decisions on two separate cases of customers, who accumulated hefty amount of debts because the card issuers charged them up to as much as nine percent interest per month. The SC said that interest rates higher than one percent per month or 12 percent per year "are excessive, iniquitous, unconscionable and exorbitant. Such stipulations are void for being contrary to morals, if not against the law."

In another decision, Bong Revilla said the SC ruled that nothing in CB circular 905-82 grants "carte blanche to lenders to raise interest rates to levels that would enslave their borrowers."

"Although the SC addressed the argument, it is our responsibility as legislators to provide the proper framework for these companies that offer credit cards and other access device transactions," the senator said.

The senator underscored the significance of the passage of such law because the absence of the same will have tremendous effect, not only to consumers, but to the country's economic condition as well.

"Let us learn from the experience of the US . I believe that one of the reasons that led to the financial crisis is the unconditional authority of the banks and lending companies which charged its credit card consumers unreasonable interest rates and other fees. This led most of Americans to fall neck-deep into debts and bankruptcy," he said, adding that credit cards should be used as a lifeline and not a tool for satisfying one's whim.