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June 13, 2011

  • News:  Lenders Must Provide True Cost Of Credit 

    Philippine credit cardholders will now receive another layer of card protection with the enactment of new legislation. The House of Representatives passed its final provision that will require credit card companies to provide full disclosure of all costs to cardholders of current and future debt on their monthly statement. According to House Bill 4655 calls for card issuers to indicate how long it will take the cardholder to pay the full amount of the current balance off if they only made the minimum credit card payment due each month. House Deputy Majority Leader and Pasig Rep. Roman Romulo stated that the bill refers to this amount as the "high price".

    House Bill 4655 is the third and last amendment of the Philippine 1998 Access Devices Regulation Law, or Republic Act No. 8484. The amendment was the final business conducted by the House prior to its adjournment of the first 2011 session. House members will be on recess until the end of July. Members of the House felt it important to address the issue promptly in order to stop what some criticize the credit card companies of by encouraging long term debt thereby generating higher income for card issuers. Card issuers will now be required to place a warning on the statement with the true cost of the long term credit card debt.

    In addition to the warning to be placed on the credit card statements, lenders must also provide the total cost to the cardholder should he only pay the minimum payment due each month. Lenders must also indicate what the amount of the payment would be if the cardholder wants to pay the current card balance off in 36 months. The information must be based on the current card balance and the card statement must clearly state that the information is based only on the current balance and would change if any additional credit was utilized.

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