Be Updated: Credit Card Interest Rates 2023

A credit card is a financial provider that allows you to buy goods and services without having cash on hand. While it's convenient and fulfills your financial needs and wants, it can also be a massive source of stress for the reason that they incur interest rates and, if your credit card debt accumulates over time, can backfire and result in a horrifying financial nightmare.

But the issuance of a credit card to an individual is subject to eligibility evaluation, including the scrutiny of one's credit history, financial stability, and continuous employment. Hence, it is only issued to those that credit card providers think can shoulder the burden of debt and are capable of paying for them without missing payment deadlines.

With all this said, this article zeroes in on the latest credit card interest rates in the Philippines this 2023. Lumina Homes is a trusted homebuilder that shares sound real estate and financial advice through our blogs. Read on for a comprehensive guide on credit card interest rates in the Philippines.

But First, What are Credit Cards Used For?

Credit cards can be used for various purposes, including paying utility bills, online purchases, your credit card bills, and availing of credit card rewards. Credit cards can be secured or unsecured.

Unsecured credit cards don't require a security deposit or collateral to be approved for a credit card application. In contrast, secured credit cards require collateral to establish proof of your repayment capabilities. People apply for a secured credit card if they have doubts about being approved for an unsecured one. This is also the path they resort to if they don't have a positive credit history, which is a prerequisite to qualify for unsecured credit cards.

In addition, there are banks with no annual fees for credit card maintenance. So if you want to save money, consider looking for credit card issuers that do not impose an annual fee to avail of and use a credit card for convenience.

What is an Interest Rate on Credit Cards?

Also called a finance charge, interest rates are what credit cardholders are required to pay if they fail to make the required monthly payments. This will continue until they pay the total amount of their credit card's outstanding balance.

In the Philippines, credit card interest rates are calculated on a 30-day period. The longer your outstanding credit card balance remains unpaid for 30 days and beyond, the higher your interest rate will be. Moreover, this will adversely affect your credit rating, in addition to burdening you with a ballooning amount of debt.

How is Credit Card Interest Rate Computed?

Refer to the following figures to cite an example:

• Current statement date: February 1, 2023

• Next statement date: March 1, 2023

• Previous balance: ₱5,000

• Payment deadline: February 21, 2023

• Date of actual payment: February 21, 2023

• Paid amount: ₱3,000

Here's a step-by-step guide to help you determine how credit card interest rates are calculated.

1. The first step is to add the number of days between your current statement date and a day before your payment due date (February 2-20). The answer is 19 days. And then, multiply the number of days (19) by your previous balance (₱5,000).

₱5,000 multiplied by 19 days = ₱95,000

2. Add the number of days starting from your payment due date (February 21) up to your next statement date (March 1). The answer is nine (9) days. Subtract your payment made on February 21 from your erstwhile balance and multiply the difference by 9.

(₱5,000 - ₱3,000) x 9 days = ₱18,000

3. Thirdly, also add the number of days starting from your previous statement date (January 1, 2023) to your current statement date (February 1). The total is 32 days. Next, add the amounts from the two preceding steps and divide them by 32 days. The computation will look like this:

(₱95,000 + ₱18,000) / 32 days = ₱3,531.25

Now, multiply this amount by the monthly interest rate of 3%.

For your current billing cycle, ₱105.94 is the total interest rate amount. Add this to your remaining balance of ₱2,000. On your next statement date, you will be charged ₱2,105.94 inclusive of the interest rate incurred.

Updated Credit Card Interest Rate 2023

To learn more about the latest interest rates on credit card use among some of the leading banks in the country, refer to our quick list below.

Note: Effective February 10, all of these banks charge a three (3) percent monthly interest rate as mandated by Bangko Sentral ng Pilipinas (BSP).

Metrobank

Installment processing fee

• ₱350 for Balance Transfer or Cash2Go

• ₱500 for Balance Conversion

Effective Date: June 1, 2021

Cash advance fee

• ₱200 per transaction

Effective Date: November 3, 2020

Late payment fee

• ₱1,000 or unpaid minimum amount due, whichever amount is lower

Effective Date: June 1, 2021

EastWest

Cash advance fee

• ₱200 per transaction

Effective Date: November 3, 2020

Minimum amount due

• ₱200 or the sum of 3% of the total balance, plus the overdue amount and over-limit amount, whichever amount is higher

Effective Date: January 15, 2021

Late payment fee

• ₱1,500 or the unpaid minimum payment due, whichever amount is lower

Effective Date: June 18, 2021

Chinabank

Late payment fee

• ₱750 or the unpaid minimum amount due, whichever amount is lower

Effective Date: December 2021

Foreign transaction fee

• 2.5 percent

Effective Date: December 2021

Quasi-cash fee

• ₱200

Effective Date: December 2021

Installment pre-termination fee

• ₱500 or 5% of the remaining unpaid balance, whichever amount is higher

Effective Date: December 2021

BPI

Special Installment Plan (SIP) pre-termination fee

• ₱550 plus 2% of the loan principal amount or the next monthly payment's interest charges (if any)

Effective Date: July 2022

Late payment fee

• ₱850 or the unpaid minimum amount due, whichever amount is lower

Effective Date: July 2022

Cash advance interest rate

• 3 percent

Effective Date: February 10, 2023

Cash advance fee

• ₱200 per transaction

Effective Date: November 3, 2020

RCBC

Cash advance fee

• ₱200 per transaction

Effective Date: November 3, 2020

Late payment fee

• ₱850 or unpaid minimum amount due, whichever amount is lower

Effective Date: November 3, 2020

Overlimit fee

• ₱600

Effective Date: November 3, 2020

Balance transfer

• ₱250

Effective Date: November 3, 2020

Unionbank

Cash advance fee

• ₱200

Effective Date: November 3, 2020

Late payment fee 

• ₱1,000

Effective Date: November 3, 2020

Overlimit fee

• ₱500

Effective Date: November 3, 2020

Security Bank

Balance Transfer, Balance Convert, Convert to ChargeLight, Ready Cash, and SimplyPay

• 1% monthly add-on rate for all tenors

Effective Date: November 3, 2020

Cash advances

• ₱200 per transaction (Peso accounts) / USD 4 per transaction (Dollar accounts)

Effective Date: November 3, 2020

Minimum amount due

• ₱500 or 3 percent of the total amount due, whichever amount is higher (for Peso accounts); $10 or 3 percent of the total amount due, whichever amount is higher (for Dollar accounts)

Effective Date: January 25, 2021

Quasi-cash fee

• 2.5% of the transacted amount

Effective Date: January 25, 2021

ChargeLight Plan pre-termination fee

• 5% of the unbilled portion of the principal amount

Effective Date: February 1, 2021

Returned check fee

• ₱1,250 or 25 USD per returned check

Effective Date: February 1, 2021

SOA retrieval fee

• ₱50 per page if the requested billing statement is from three (3) or more months ago

Effective Date: February 1, 2021

Quick Tips to Avoid Credit Card Interest Rate Charges

If you want to decrease the amount you spend on interest rates for your credit card use, or the monthly amount you see on your credit card bill, follow these tips to help you make smart financial decisions.

Also read: How to Waive your Credit Card Annual Fee

1. Make full monthly payments, not partial

The culprit of a ballooning interest rate is not making the required monthly payment. Availing of a credit card means pledging that you have the financial capacity to pay your dues. So make sure not to miss payments. More importantly, that you will pay in full and not only partially.

2. If you can, pay more than the required minimum amount

If your current financial situation allows, pay more than the minimum amount required and make an advanced payment for the next billing cycle. This will reduce your interest rates and will therefore free you from paying extra fees and charges borne out of missing deadlines or making insufficient payments for each billing cycle.

3. Avoid going over your credit limit unless very necessary

A cash advance is going over your credit card limit and hence will increase your interest rates. Unless it's very necessary, refrain from resorting to going over your credit limit to avoid incurring high interest rates and an amount of debt that will be hard for you to repay on time.

4. Don't ignore reading the terms and conditions of your credit card provider

No matter how tedious reading terms and conditions to you is, make sure to do so. These terms are usually broken down into easy-to-understand sentences for easier comprehension. If there is an industry jargon you're not familiar with, make a quick Google search to check for its basic definition.

5. Minimize your purchases using your credit card

Using your Visa credit card has its pros and cons. It can be addicting that you will end up making unnecessary purchases using it. To prevent this on top of incurring exorbitant interest rates as it accumulates, only use your credit card modestly.

There are good debts and bad debts. One great example of the former is purchasing an affordable house and lot. Homeownership is a need that every Filipino family is entitled to have. If you are financially stable enough, an affordable house and lot for sale through Lumina Homes is a steal.

That is to say, you can avail of a house and lot in the Philippines without shelling out more than what you're willing to pay for a home with quality features. Rest assured that anywhere you are or the location you prefer, our housing communities are strategically located in accessible neighborhoods. These are near academic institutions, marketplaces, hospitals, churches, and more for every homeowner's convenience.

Need to know more about our affordable housing? Message us through this website or via our social media accounts. A sales representative will be available to accommodate you and respond to your real estate investment concerns. Get in touch with us today!