Excessive credit card charges hit

A congressman has urged regulators to ban local credit card issuers from collecting "excessive and questionable" annual member fees from some 3.5 million cardholders.

"We find the fees absolutely unnecessary, considering that card issuers already exact as much as 39-percent interest and other surcharges on outstanding card balances," Catanduanes Rep. Joseph Santiago said.

In the United States and other countries, Santiago noted that issuers do not impose annual membership fees on cardholders.

"Let’s take the case of Citibank. The bank does not collect annual member fees from its cardholders in the US. And yet, here, the bank charges cardholders an annual (member) fee," Santiago pointed out.

"There’s no such thing as cardholder annual member fees in the US. Some issuers there collect member fees from cardholders who opt to enroll in special programs that offer cash rewards on usage, but such programs are strictly voluntary," Santiago said.

At present, local card issuers levy up to P1,200 in annual member fees from each cardholder.

On top of the annual fees, local issuers generally charge a monthly interest of 3.25 percent on outstanding card balances. This translates to an "annualized" interest charge of 39 percent.

As of September this year, some 3.5 million Filipinos have been issued credit cards, according to the Credit Card Association of the Philippines.

"This means local issuers have been collecting some P3.5 billion in annual member fees from cardholders. And yet, these fees, strictly speaking, are totally unjustifiable," Santiago said.

"Local issuers still manage to collect these fees simply because of the lack of responsive consumer activism here," he said.

Regulators and consumer watchdogs should compel issuers to abolish the "onerous and dubious" fees, he added.