BSP Keeps 3% Credit Card Interest Cap But Allows Higher Installment Add-On Rate and Cash Advance Fee
CREDIT CARD INSTALLMENT 2026 – If you often swipe your credit card for “0% or low-interest” installment deals or withdraw cash from it during emergencies, take note: banks will soon be allowed to charge more for these two transactions.
The Bangko Sentral ng Pilipinas (BSP) raised the ceiling on the monthly add-on rate for credit card installment loans to 1.5% from 1%, and the maximum one-time processing fee for cash advances to ₱300 from ₱200 per transaction, the Philippine News Agency reported. The good news is that the 3% monthly cap on finance charges for unpaid credit card balances stays the same.
The changes are covered by BSP Circular No. 1242, which was signed by BSP Governor Eli Remolona Jr. on November 10, 2026, according to BusinessWorld. The circular implements amendments approved by the Monetary Board in October.
New BSP Credit Card Caps at a Glance
| Charge | Old Cap | New Cap |
|---|---|---|
| Interest / finance charge on unpaid balance | 3% per month | 3% per month (unchanged) |
| Monthly add-on rate on installment loans | 1% per month | 1.5% per month |
| One-time cash advance processing fee | ₱200 per transaction | ₱300 per transaction |
Take note that these are maximum amounts. Each bank or card issuer can still set its own rates as long as these stay within the ceilings set by the central bank.
When Will the New Rates Take Effect?
The circular takes effect 15 calendar days after it is published in the Official Gazette or in a newspaper of general circulation. As of this writing, the exact effectivity date has not yet been announced, Context.ph noted.
Here’s what cardholders need to know:
- The higher ceilings will apply only to new transactions made on or after the effectivity date.
- Installment loans you entered into before the effectivity date will stay under their originally agreed terms and conditions.
- Interest on your regular unpaid credit card bill will not go higher than 3% a month.
- All credit card fees and charges remain subject to the BSP’s consumer protection, disclosure and transparency rules, so banks must clearly inform you of the rates they apply.
How Much More Could You Pay on an Installment?
An add-on rate is computed on the original amount you borrowed for every month of the term. To give you an idea, here’s a sample computation for a ₱30,000 purchase converted to a 12-month installment, assuming the bank charges the full maximum rate:
| Sample ₱30,000 / 12 months | At 1% add-on (old cap) | At 1.5% add-on (new cap) |
|---|---|---|
| Monthly add-on interest | ₱300 | ₱450 |
| Total add-on interest | ₱3,600 | ₱5,400 |
| Monthly amortization | ₱2,800 | ₱2,950 |
| Total amount paid | ₱33,600 | ₱35,400 |
In this example, the maximum possible difference is ₱150 a month, or ₱1,800 over one year. Actual charges will depend on your bank’s pricing and on promos such as true 0% installment deals offered by partner merchants.
Why Did the BSP Raise the Caps?
“These adjustments aim to balance consumers’ protection with access to credit. They also provide credit card issuers more flexibility in setting charges as operating costs rise,” the central bank said in a statement quoted by Daily Tribune.
The BSP first imposed caps on credit card charges in November 2020 as pandemic relief, setting the monthly finance charge ceiling at 2%, the installment add-on rate at 1% and the cash advance fee at ₱200. In February 2023, it raised the finance charge cap to 3% a month. Before the pandemic, there were no such caps. The installment and cash advance ceilings had stayed unchanged since 2020 until this latest review.
The move comes as borrowing costs climb. The BSP has hiked its policy rate by a total of 125 basis points to 5.5%, while inflation jumped to a three-year high of 7.8% in October, Inquirer reported. Credit card receivables reached ₱1.3 trillion in September, up 22.8% from a year earlier.
Tips for Cardholders
- Ask your bank for its updated installment add-on rate and cash advance fee before your next big purchase.
- Compare the total cost of an installment plan versus paying the full amount on or before your due date.
- Use cash advances only for real emergencies, since you pay the processing fee on top of the interest.
- Pay more than the minimum amount due so a smaller balance is charged the 3% monthly finance charge.
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