Question & AnswerQ&A (Republic Act No. 10870)
The short title of Republic Act No. 10870 is the 'Philippine Credit Card Industry Regulation Law'.
The basic policy is to foster the development of the credit card industry as an indispensable tool to make consumer credit available to all Filipinos under conditions of fair and sound consumer credit practices aligned with global best practices, promoting an efficient payment system, encouraging competition and transparency, and protecting and educating credit cardholders.
The Act governs all credit card issuers, acquirers, and all credit card transactions.
The BSP's supervision includes issuing rules or standards of operation, conducting examinations, ensuring compliance with laws and regulations, determining reasonableness of fees and charges, and issuing regulations.
Credit card issuers shall determine credit limits based on the cardholder's credit standing and financial capacity. Changes in credit limit may be implemented based on risk management policies, with notification to the cardholder. Cardholders may decline increases and may request adjustments subject to issuer approval.
Finance charges and other fees from nonpayment in full or on time of the outstanding balance are based on the unpaid amount of the outstanding balance.
Any transaction made before the reporting of a lost or stolen card is for the account of the cardholder.
Credit card issuers may use all reasonable and legally permissible means but must observe good faith, refrain from harassment or abuse, and avoid unfair practices as defined by BSP rules.
The payment due date is automatically moved to the next business day, and payments made to authorized payment centers on that date are considered timely.
Payments above the minimum must first apply to fees and charges, then to the billed balance with the highest interest rate, then to the next highest rate, following the original rates of promotional offers.
A cardholder may terminate the account anytime by paying in full or entering into a payment agreement for the outstanding balance. Installment repayments are generally subject to interest unless there is a violation of the agreement.
Willful violations may be punished with imprisonment from not less than two (2) years to ten (10) years, a fine from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00), or both, at the court's discretion.