Financial Education: Building Block for a Stronger Economy

Financial Consumer Protection DepartmentSupervision and Examination SectorBangko Sentral ng Pilipinas5th Floor Multi-storey BuildingBSP Complex, A. Mabini St., Malate1004 Manila

Telephone Numbers:Trunk Line : (02) 708-7701 local no. 2584Direct Line: (02) 708-7087

Email Address: consumeraffairs@bsp.gov.ph

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Developed by the Financial Literacy and Advocacy DivisionFinancial Consumer Protection Department

Subsection X320.10, MORB; Subsections 4301N.10 and 4320Q.10, MORNBFI, require credit card companies to retain confidentiality of information of cardholder except under the following circumstances:

Subsection X320.11, MORB; Subsections 4301N.11 and 4320Q.11, MORNBFI, require card issuers to include in their contract with cardholders a provision authorizing the issuer to suspend or terminate the effectivity of the right to use the card, if circumstances warrant.

Subsection X320.13, MORB; Subsections 4301N.13 and 4337Q.13, MORNBFI, require the credit card issuer to inform/notify the cardholder in the agreement, contract or any equivalent document governing the issuance or use of the credit card that, pursuant to the provisions of Articles 1278 to 1290 of the New Civil Code of the Philippines, as amended, the use of credit card will subject his/her deposit/s with the bank to offset against any amount/s due and payable on his/her credit card which have not been paid in accordance with the terms of the agreement/contract.

late payment or penalty fees may be based on the unpaid minimum amount due or a prescribed minimum fixed amount; and

said late payment or penalty fees may be based on the total outstanding balance of the credit card obligation, including amounts payable under installment terms or deferred payment schemes, if the contract between the issuer and the cardholder contains “acceleration clause.”

disclosure of information is with the consent of the cardholder;

release, submission or exchange of customer information with other financial institutions, credit information bureaus, credit card issuers, their subsidiaries and affiliates;

upon orders of a court of competent jurisdiction or any government office or agency authorized by law, or under such conditions as may be prescribed by the Monetary Board;

disclosure to collection agencies, counsels, and other agents of the bank or card company to enforce its rights against the cardholder;

disclosure to third party service providers solely for the purpose of assisting or rendering services to the bank or card company in the administration of its credit card business; and

Subsection X320.8, MORB; Subsections 4301N.8 and 4320Q.8, MORNBFI, provide that the card issuer and the cardholder may, prior to the consummation of the transaction, agree in writing to a deferral of all or part of one or more unpaid installments, and the bank may collect a deferral charge which shall not exceed the rate previously disclosed pursuant to the provision on disclosure.

Subsection X320.9, MORB; Subsections 4301N.9 and 4320Q.9, MORNBFI, require that:

no late payment or penalty shall be collected unless collection thereof is fully disclosed in the contract between the issuer and the cardholder;

other currency conversion charges and costs arising from the purchase by the card company of foreign currency to settle the customer’s transactions.

disclosure to third parties such as insurance companies, solely for the purpose of insuring the bank from cardholder default or other credit loss, and the cardholder from fraud or unauthorized charges.

If you find that you are in trouble paying your credit card bills, contact your credit card company immediately. Try to work out a modified payment plan that reduces your payables to a more manageable level. Non-payment of credit card bills will not only result to penalties and surcharges, but will also be reflected on your credit history. This credit history reflects your credit activity and payment performance on any credit account you’ve had in the past and a good credit reputation will ensure ease of approval of future loan applications. Don’t wait until your accounts are turned over to a collecting agent. In the event that your account gets turned over to a collection agency, it helps to know that Bangko Sentral ng Pilipinas (BSP) regulations on Unfair Collection Practices require that credit collection agencies treat your fairly and prohibit certain methods of debt collection. Specifically, Section X320.15 of the Manual of Regulations for Banks (MORB), provides that subsidiary/affiliate credit card companies, collection agencies, counsels, and other agents may resort to all reasonable and legally permissible means to collect amounts due them under the credit card agreement. However, in the exercise of their rights and performance of duties, they must observe good faith, reasonable conduct and refrain from engaging in unscrupulous or untoward acts. The following are considered as violations of this regulation:

Use of threat of violence or other criminal means to harm the physical person, reputation, or property of any person;

Use of obscenities, insults or profane language which amount to a criminal act under applicable laws;

Disclosure of the names of credit cardholders who allegedly refuse to pay debts;

Threat to take any action that cannot legally be taken;

Communicating or threat to communicate to any person false credit information, including failure to communicate that a debt is being disputed;

False representation or deceptive means to collect any debt or to obtain information concerning a cardholder; or

Contacting the cardholder at unreasonable/inconvenient times, i.e., before 6:00 a.m. or after 10:00 p.m., unless the credit cardholder has given permission to do so, or account is past due for more than sixty (60) days.

Other laws, rules and regulations on credit cards include the following:

R.A. No. 8484 (Access Devices Regulation Act) dated 11 February 1998

Section 4 requires that, any application to open a credit card account for any person under an open-end credit plan or a solicitation to open such an account, either by mail, telephone or other means, shall disclose the following information in writing or orally, as the case may be:

the annual percentage rate (APR);

the amount of any annual fees and other fees;

a detailed explanation of method used in determining the balance upon which the finance charge is computed; and

any fee imposed for an extension of credit in the form of cash.

Section 14 states that a cardholder who abandons or surreptitiously leaves his/her residence, place of business or employment as stated in his/her credit card application, without informing the bank or credit card company where he/she could be actually contacted, and if at the time of such abandonment or surreptitious leaving, the outstanding and unpaid balance is past due for at least ninety (90) days and is more than Ten thousand pesos (₧10,000), shall be prima facie presumed to have used his/her credit card with intent to defraud.

Manual of Regulations for Banks (MORB) and Manual of Regulations for Non-Bank Financial Institutions (MORNBFI)

Subsection X320.4 of MORB; Subsections 4301N.4 and 4320Q.4 of MORNBFI require disclosure of the following items:

the finance charges, individually itemized, which are paid or to be paid by the cardholder;

non-finance charges, individually itemized, which are paid or to be paid by the cardholder in connection with the transaction but which are not incident to the extension of credit;

percentage that the finance charge bears to the total amount to be financed expressed as a simple annual rate, as the case may be, on the outstanding balance of the obligation;

effective interest rate per annum;

for installment loans, the number of installments, amortization schedules;

the default, late payment/penalty fees or similar delinquency-related charges payable in the event of late payments;

the conditions under which interest may be imposed, including the time period, within which any credit extended may be repaid without interest;

the method of determining the balance upon which interest and/or delinquency charges may be imposed;

the method of determining the amount of interest and/or delinquency charges, including any minimum or fixed amount imposed as interest and/or delinquency charge;

where one or more periodic rates may be used to compute interest, each such rate, the range of balances to which it is applicable, and the corresponding simple annual rate;

other fees, such as membership/renewal fees, processing fees, collection fees, credit investigation fees and attorney’s fees; and

for transactions made in foreign currencies and/or outside the Philippines, for dual currency accounts (pesos and dollar billings), as well as payments made by credit cardholders in any currency other than billing currency:

In addition, Section X320.15 requires that banks and their subsidiary/affiliate credit card companies shall inform their cardholder in writing of the endorsement of the collection of their account to a collection agency/agent, or the endorsement of their account from one (1) collection agency/agent to another, at least seven (7) days prior to the actual endorsement. The notification shall include the full name of the collection agency and its contact details. (As amended by Circular No. 754 dated 17 April 2012)

the application of payments;

the manner of conversion from the transaction currency and payment currency to Philippine pesos or billing currency;

definition or general description of verifiable blended exchange/conversion rates (e.g., MasterCard or VISA International rates on the date the item was processed/posted to the billing statement, plus mark-up, if any) including conversion commission; and/or

are you having difficulties in paying your credit card debt?