BSP keeps the credit card finance charge cap at 3% a month and raises instalment and cash-advance ceilings

Implications for lenders

Card issuers and lenders offering instalment plans can price new instalment loans up to 1.5% a month a month once the circular takes effect, while revolving balances stay capped at 3% a month. Affordability checks and collections plans may need to reflect the higher instalment cost for borrowers already showing strain, with card NPLs at 5.34%. Disclosure documents and billing systems need to separate new transactions from existing instalment plans.

Implications

Facts

Rule: the Bangko Sentral ng Pilipinas (BSP) issued Circular 1242 on 10 November 2026 and announced it on 12 November. The maximum monthly interest or finance charge on unpaid credit card balances stays at 3% a month, unchanged; equivalent to 36% a year. ¹ The maximum monthly add-on rate on credit card instalment loans rises to 1.5% a month, up from 1.0%, in place since November 2020. ² The maximum one-time processing fee on a cash advance rises to PHP 300 per transaction, up from PHP 200. ³

Timing and scope: the circular takes effect fifteen calendar days after publication in the Official Gazette or a newspaper of general circulation, and the BSP said it would announce the date on its website. The higher ceilings apply only to transactions made after that date. All card fees and charges remain subject to existing consumer protection, disclosure and transparency rules. The ceilings were introduced in November 2020 as pandemic relief; the instalment and cash-advance caps had not changed since then.

Rationale: the BSP said the adjustments "aim to balance consumers' protection with access to credit" and give issuers more flexibility in setting charges as operating costs rise. It said it reviews the ceilings periodically in light of economic conditions, the soundness of financial institutions and monetary policy settings.

Analysis

Funding and risk backdrop: the change comes after the BSP raised its policy rate to 5.50% in October, up from 5.0%, ⁴ with inflation at 7.8% in October. ⁵ Card balances are large and still growing: credit card receivables reached PHP 1.34 trn in September, growing 22.8% year on year. ⁶ The card NPL ratio was 5.34% in July, up from 5.28% in June. ⁷ Keeping the revolving-balance cap while lifting the instalment and cash-advance caps lets issuers recover more on products where pricing had been fixed since 2020, without raising the headline rate on revolving debt.

Cross-country: Malaysia's current maximum financing rate on credit cards is 18% a year, ⁸ and its banks' basic credit cards are capped at 14% a year. ⁹ At 3% a month (unchanged; equivalent to 36% a year), the Philippine revolving cap is about double Malaysia's general maximum.

Counterpoints and uncertainties

The effective date depends on publication, which the BSP had not announced by 13 November; press accounts cover only the three ceilings, so the circular may contain further details, for example on other fees. These are ceilings: competition, zero-interest promotions and merchant-funded plans may keep actual instalment pricing below the cap. Higher instalment costs may also add to strain on borrowers at a time when card NPLs are rising.