QuestionsQuestions (Republic Act No. 10870)
RA 10870 is known as the “Philippine Credit Card Industry Regulation Law.” The State’s policy is to foster development of the credit card industry under fair and sound consumer credit practices aligned with global best practices, promoting an efficient payments system, competition and transparency, and providing mechanisms to protect and educate credit cardholders.
It governs all credit card issuers, acquirers, and all credit card transactions.
It means nonpayment, or payment of an amount less than the minimum amount due/minimum payment required, for at least three (3) billing cycles.
An acceleration clause is a contractual provision allowing the issuer to demand full settlement of the obligation upon default/nonpayment or for any valid reason. Under the law’s disclosure rules, late payment fees/penalties may be based on the total outstanding balance including amounts classified/reported as past due if the contract contains an acceleration clause.
The service level agreement must include a provision requiring merchants to perform due diligence to establish the identity of the cardholders.
Finance charges and other fees arising from nonpayment in full or on time must be based on the unpaid amount of the outstanding balance.
“Important Reminder: Paying less than the total amount due will increase the amount of interest you pay and the time it takes to repay your balance”
The cardholder must be notified at least ninety (90) days prior to any change in the manner of computation of the outstanding balance and fees. If unacceptable, the cardholder may terminate the account subject to Section 25. Compliance may be deferred for a reasonable time as BSP determines for system modifications.
If the cardholder breaches the credit limit by a new transaction, the transaction may be processed at the issuer’s discretion, provided that the fees are clearly and prominently disclosed in the table of fees and charges.
Any transaction made prior to reporting to the credit card issuer shall be for the account of the cardholder.
Issuers/collection agents may use all reasonable and legally permissible means, but must observe good faith, reasonable conduct, proper decorum, and must refrain from unscrupulous acts. They may not harass, abuse, or oppress any person or engage in unfair practices, as defined by BSP rules.
The due date automatically moves to the next business day. Payments through authorized modes made to accredited payment centers are considered made on the same date.
Amounts in excess of the minimum payment are applied first to fees and charges, then to the billed balance bearing the highest rate of interest, followed by the next higher rate until exhausted; however, original rates for promotional offers determine the hierarchy of payment.
The cardholder may cancel/terminate anytime, provided the cardholder pays in full or enters into another agreement for payment of the outstanding balance and new purchases/debits/deferred installments via one-time payment or installments within a fixed period. Installment repayment is generally subject to interest unless the new agreement is violated.