Everything You Need to Know About Credit Card Rates in the Philippines 2023


Goodbye to the 2% credit card interest charge. If you’re an existing credit cardholder, chances are, you have already received a notification from your issuer about the interest rate adjustments. Yes, and it’s back to the 3% monthly interest rate.

Banko Sentral ng Pilipinas has already released Circular No. 1165, which contains an advisory on credit card interest rates and fees. So, what’s in it for you as a credit cardholder? Carry on and find out how you can avoid paying additional charges.

How much is the credit card rate in the Philippines in 2023?

The Monetary Board (MB) has approved amendments to the regulations governing interest or finance charges for credit card receivables.

These changes, set out in Resolution No. 55 and dated 13 January 2023, provide Filipino credit cardholders with greater protection from excessive finance charges and offer more flexibility in repayment terms.

Highlight of the adjusted credit card interest rates and fees in 2023

Banks can only charge an annual interest or finance rate of up to 36% or 3% monthly.
No more than 1% monthly add-on rate shall be imposed for credit card installment loans.

For credit card cash advances, aside from the maximum interest rate cap mentioned above, banks cannot collect any other charges or fees other than a processing fee of a maximum of ₱200 per transaction.

These maximum rates and fees are subject to review by Banko Sentral ng Pilipinas every six months. The higher ceiling on credit card transactions will take effect 15 days after the publication of the circular.

Most banks and card issuers have implemented the adjustments since February 10, 2023. BDO has extended the adjustment date to March 12, 2023.

Is the interest rate the same as the finance charge?

A finance charge is a fee charged to a consumer for borrowing money. It’s usually expressed as an annual percentage rate and includes the interest rate, service fees, loan origination fees, and other related charges, depending on the type of loan.

The interest rate is one of the basic components of the finance charge because it represents what you will pay in interest over the life of a loan. The higher the interest rate, the more expensive your loan will be in total costs.

All banks must be transparent when it comes to financing charges. Every lender must disclose all costs associated with a loan, including any additional fees or prepayment penalties.

How will the increased interest rate affect my credit card use?

If you only pay the minimum amount on your credit card balance each month, you will likely end up in a cycle of increasing interest rates and fees.

It’s because when you only pay the due amount, it often does not cover the total balance, and any unpaid balance is then subjected to the increased 3% interest rate per month. Over time, this can add up quickly and result in higher costs for your total debt.

If you incur any additional charges along the way, such as late payments or exceeding your credit limit, these too can be subject to extra charges. Eventually, this will lead to a much higher overall cost than if you paid off the total monthly balance.

Tips on avoiding being charged on credit card interest rate

Having a credit card is a privilege and a responsibility. So, ensure you don’t get charged on fees and interest rates consistently, as they can pile up. Here’s how to avoid them.

1. Pay your credit card balance in full each month.

Paying your credit card balance in full monthly is one of the simplest but most effective steps to ensure a healthy financial future. It increases your credit score and saves you serious cash in the long run since you won’t be stuck with compound interest gathering up on an unpaid balance.

2. Keep track of when payments are due.

Another tip for avoiding interest charges is to ensure you know your payment due dates and always schedule them accordingly. Late payments can lead to higher interest rates, so setting up payment reminders or calendar alerts is a lifesaver for you and your wallet.

3. Watch out for those purchase convert offers.

Credit cards come with all sorts of tempting deals, like purchase converts, and it lets you convert your credit card debt into small monthly payments. Sadly, they usually have extra strings attached – processing fees and interest charges.

Credit card issuers typically charge you ₱500 to process the conversion request. Then you’ll also have to consider the add-on interest rate you will pay on top of your monthly payment.

Final thoughts

After reading this post, it is clear that everyone in the Philippines should be aware of the adjusted credit card interest rates and fees in 2023. With this new development, it’s best to use credit cards responsibly and pay off balances immediately.

Remember that although the debt can seem manageable, the interest rate can quickly add up if you don’t stay on top of your payments. To ensure money is never wasted due to a high interest rate, read the terms carefully before availing of a promo or a balance conversion.