BSP raises credit card installment rate cap to 1.5%

Credit cardholders in the Philippines may face higher charges when converting purchases into installment payments or withdrawing cash using their cards following new rules issued by the Bangko Sentral ng Pilipinas.

Under BSP Circular No. 1242, Series of 2026, the central bank raised the maximum monthly add-on rate for credit card installment loans from 1% to 1.5%. It also increased the maximum processing fee for credit card cash advances from P200 to P300 per transaction.

The circular, signed by BSP Governor Eli M. Remolona Jr. on Nov. 10, amends the rules on interest and finance charges for credit card transactions under the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions.

Despite the adjustments, the BSP is retaining the maximum annual interest rate of 36% for regular credit card transactions, equivalent to a 3% monthly cap.

For credit card installment loans, banks and credit card issuers may now impose a monthly add-on rate of up to 1.5%.

This applies to purchases converted into installment payments, where the cardholder pays the amount owed over a set period. 

The circular states that, aside from the applicable maximum interest rate caps, no other charge or fee may be imposed or collected for cash advances apart from the processing fee.

Additionally, the BSP said that the adjustment will apply only to new transactions starting on the effectivity of the circular, which was issued on Nov. 10.

Cardholders may check with their respective banks or credit card issuers for information on how the changes will apply to their accounts and transactions.