After reading Minimum Requirements For The Issuance Of Credit Cards, read also Minimum Requirements For The Governance And Risk Management System For Credit Card Operations Of Banks
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Before issuing credit cards, bank shall conduce know-your-client and customer identification procedures
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All credit card applications shall undergo a strict credit underwriting process
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Banks shall disclose to each of their existing and potential credit cardholders the finance charges for unpaid amounts
Before issuing credit cards, credit card issuers must conduct know-your-client (KYC) procedures and exercise proper diligence in ascertaining that applicants possess good credit standing and are financially capable of fulfilling their credit commitments.
All credit card applications shall undergo a strict credit underwriting process, and information stated shall be verified and validated by authorized personnel of banks, other than those handling marketing.
What shall banks disclose to each of their existing and potential credit cardholders?
The law says:
Banks shall disclose to each of their existing and potential credit cardholders the following information:
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the finance charges for unpaid amounts after payment due date to be paid by the cardholder;
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other charges or fees, individually itemized, such as membership/renewal fees, processing fees, over-the-limit fees, collection fees, credit investigation fees and attorney’s fees to be paid by the cardholder in connection with the transaction and incidental to the extension of credit;
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the percentage that the interest/finance charge bears to the total amount to be financed expressed as simple monthly or annual rate, or a monthly or annual effective interest rate, on the outstanding balance of the obligation;
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for installment loans, the number of installments, amount and due dates or payment schedules to repay the indebtedness;
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the late payment fee/penalty for late payment or similar delinquency-related charges payable in the event of late payments;
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when one (1) or more periodic rates is used to compute interest: each such rate, the balances to which it is applicable, and the corresponding simple annual rate;
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in cases when transactions are made in foreign currencies, or for dual currency accounts, or when payments are made in any currency other than the billing currency: the manner of conversion from transaction currency to billing currency; or a general description of the conversion rates;
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a reminder to the cardholder in the billing statement, or its equivalent document, that payment of only the minimum amount due or any amount less than the total amount due for the billing cycle/billing period would mean the imposition of interest and/or other charges;
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to the extent practicable, a detailed explanation and a clear illustration of the manner by which all interest, charges and fees are computed;
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a table of all applicable fees, penalties, interest rates, conversion reference rates for third currency transactions, and the reason for their imposition, on credit card application forms, billing statements, and in the terms and conditions of the credit card agreement; and
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any other information that may be required by the Bangko Sentral.
Banks shall endeavour to convey the above information in a manner that is understandable to the credit cardholder. The items enumerated above may be included in a billing statement on a quarterly basis at the minimum, in tabular format.
They shall ensure that all the above information, conveyed through written or electronic forms of communication, is easy to read for the average person.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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