TECHNOLOGY is a double-edged sword. While offering the utmost convenience to users, misuse or abuse can easily put users in difficult situations.

One such example is the credit card. As the Bangko Sentral ng Pilipinas’ Financial Consumer Affairs Group (FCAG) always reminds credit card owners, “It is easy to swipe it, but how do you wipe it?”

Credit card users should be aware that there is no BSP existing regulation which puts a ceiling on fees, charges and interest rates.

The then Central Bank of the Philippines, through Circular No. 905, had removed the ceiling on interest rates on loans or forbearance of money, goods or credit, for both secured and unsecured loans and regardless of maturity.

While the Monetary Board is not precluded from issuing subsequent circulars reimposing a maximum interest rate on a loan or forbearance of any money, goods or credits, whenever warranted by prevailing economic and social conditions, the Monetary Board is not inclined at present to lift Circular No. 905.

The Monetary Board currently thinks it is enough that banks and their subsidiary credit card companies properly disclose finance charges and interest rates to cardholders and thus help cardholders make informed choices and decisions.

While in a recent decision the SC reduced the interest rate and penalty fee imposed for unpaid credit charges for being “iniquitous and unconscionable”, this ruling can not be invoked universally. (See Macalinao v. BPI, G.R. No. 175490).

In other words, an aggrieved credit card holder still has to go to court. And courts still have to consider the circumstances of each case since what may be iniquitous and unconscionable in one may be totally just and equitable in another.

By way of background, the Supreme Court partially granted the petition of a credit card user, who had faced a lawsuit from a credit card company for failing to settle unpaid charges.

The high tribunal ruled that the credit card company’s interest rate and penalty fee of 3 percent per month or 36 percent per annum, which were charged to the user, should be reduced to two percent per month or 24 percent per annum.

The Supreme Court decided that although the credit card’s terms and conditions stipulated the three percent interest rate, the courts may reduce the interest rate and penalty charge as reason and equity demand.

The Supreme Court also considered the user’s partial payments and decided that the interest rates stipulated by the credit card company in its terms and conditions are iniquitous and unconscionable.

In the United States, credit card users are protected from sudden hikes in interest rates by new rules issued by the Federal Reserve.

The new Fed rules, which take effect next month, generally prevent rate increases during the first year after an account is opened. After the first year, companies must provide customers with a 45-day notice before increasing interest rates.

The BSP’s FCAG, headed by acting deputy director Ma. Belinda Caraan, has repeatedly stressed that the key for card users to avoid excessive finance charges, fees and penalties is to be responsible by paying their bills on time to avoid late payment fees and penalties, and as much as possible, try to pay off all outstanding dues every billing cycle.

Spending within your means, according to FCAG, is the surest way to avoid finance charges and continue to enjoy using your credit card.

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