Carrying a ₱50,000 balance at the legal maximum of 3% a month and paying it off over a year costs about ₱10,277 in interest. 139 of the 141 Philippine cards with a published rate charge the full 3% a month. Pick your card, then choose what to work out: a balance you carry, an instalment, or a cash advance.
₱50,000 balance, 3% a month, 12 equal payments, no new purchases
Payment = balance × r ÷ (1 − (1 + r)−n); interest = payments − balance. Rate cap 3% a month.
₱5,023 a month₱10,277 interest
One month unpaid
₱20,000 left after the due date, 3% a month
Unpaid balance × monthly rate
₱600
Instalment
₱30,000 over 12 months at the 1% add-on cap
Amount × add-on rate × months
₱3,600 add-on₱2,800 a month
Cash advance
₱10,000 withdrawn, repaid after 30 days, 3% a month
Fee (cap ₱200, no other fee) + amount × rate ÷ 30 × days
₱500₱200 fee + ₱300 interest
Minimum only
₱20,000 at 3% a month, paying Metrobank's minimum each month
Metrobank: 3.5% of the balance on the statement date, plus any over-limit and past-due amounts, or ₱1,000, whichever is higher. Metrobank fee page
31 months₱10,999 interest
Pay it off in (months)
Interest you pay at 3% a month:
₱10,277
Monthly payment:
₱5,023
Total you pay:
₱60,277
Legal cap (36% a year) 3% a monthBSP cap 3%
Next step: if the interest above is more than you want to pay, clear the balance in fewer months, or move to a card with a lower rate or no annual fee: compare every card by cost, or see the cards with no annual fee.
How to compute credit card interest
Balance you carry: monthly payment = balance × r ÷ (1 − (1 + r)−n), where r is the card's monthly rate and n the number of months. Interest is the total paid minus the balance. This assumes you pay on time and add no new purchases.
Instalment: add-on interest = amount × add-on rate × months, at most 1% a month. The add-on is charged on the original amount for every month, so it costs more than the same headline rate charged on a falling balance.
Cash advance: the processing fee (at most ₱200) plus amount × monthly rate ÷ 30 × days from the day you withdraw. There is no interest-free period.
Banks count interest on the daily balance, so a statement can differ from these figures by a few pesos.
What a finance charge is, and how to stop paying it
The finance charge on your statement is the interest for the month: the card's rate applied to what you did not pay by the due date, plus interest on any cash advance from the day you took it. On a ₱20,000 balance at 3% a month, that is about ₱600 for one month.
Pay the total amount due, not the minimum, by the due date. Purchases then carry no interest.
If you cannot, pay as much above the minimum as you can; interest runs only on what is left.
Avoid cash advances: interest starts the day you withdraw, with no grace period.
In force since 2023 (Monetary Board Resolution No. 55, 13 January 2023; effective 15 days after publication), BSP Circular No. 1165, s.2023 limits the interest or finance charge on all credit card transactions to 36% a year. Card instalment plans may charge a monthly add-on rate of at most 1%, and a cash advance can carry only a processing fee of up to ₱200 on top of interest. The BSP reviews the caps every six months. The circular reads:
"Banks shall impose an interest or finance charge on all credit card transactions not to exceed an annual interest rate of thirty-six (36%) except credit card installment loans which shall be subject to monthly add-on rate not exceeding one (1) percent: Provided, That in the case of credit card cash advances, aside from the foregoing applicable maximum interest rate caps, no other charge or fee shall be imposed or collected apart from the processing fee in the maximum amount of Php200.00 per transaction."
Paying only the minimum, bank by bank
The minimum amount due keeps the account current and avoids the late fee, but interest keeps running on the rest. Each bank sets its own minimum. These are the rules printed on their fee pages, with what they mean for a ₱20,000 first statement of new purchases at 3% a month. Months to clear assume no new spending, and are worked out where the rule is a flat share of the amount due.
3% of the amount due (not counting instalments, the over-limit amount and new transactions on this statement) or ₱850, whichever is higher, plus 3% of the instalment amortisation, plus any overdue and over-limit amounts. fee page
3% of the amount due (not counting instalments, the over-limit amount and new transactions on this statement) or ₱850, whichever is higher, plus 3% of the instalment amortisation, plus any overdue and over-limit amounts. fee page
3% of the amount due (not counting instalments, the over-limit amount and new transactions on this statement) or ₱850, whichever is higher, plus 3% of the instalment amortisation, plus any overdue and over-limit amounts. fee page
The whole balance if it is ₱850 or less. Above that, 3.57% of the balance not counting this month's new purchases, cash advances and adjustments, with a floor of ₱850, plus 100% of any past-due amount. fee page
3% of the statement balance not counting this statement's new transactions and past-due amounts, plus the past-due amount, late charge and over-limit amount, or ₱500, whichever is higher. RCBC then rounds it down to the nearest ₱100 (₱500 to ₱1,000), ₱500 (₱1,000 to ₱3,000) or ₱1,000 (above ₱3,000). fee page
1% of the total amount due, plus billed interest, late charges and past-due amounts in full, plus 1% of unbilled instalment principal, or ₱500, whichever is higher. fee page
1% of what you owe (not counting the annual fee and charges), plus one-twelfth of the annual fee, plus over-limit, finance and late charges, or ₱1,500, whichever is higher; then 100% of any monthly instalment and any past-due or over-limit amount on top. fee page
By formula
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The fewer months you take, the less interest you pay: set the months above to 3 and then to 24 to see the difference. To stop paying interest altogether, pay the full statement balance by the due date.
Card interest and your taxes
Card fees and interest do not lower the tax on a salary: Section 34 of the Tax Code allows no deductions against compensation income. A self-employed cardholder who takes the 40% optional standard deduction gets it in place of itemized expenses, so card charges do not reduce tax there either.
Questions
How do I compute credit card interest in the Philippines?
Multiply what you leave unpaid by the card's monthly rate, at most 3% a month under BSP Circular No. 1165, s.2023. Banks count it daily: unpaid balance × monthly rate ÷ 30 × days. A ₱20,000 balance left for a month at 3% costs about ₱600. Pay the full statement balance by the due date and no interest is charged on purchases.
What is a finance charge on a credit card, and how do I avoid it?
It is the interest the bank adds when you pay less than the full statement balance by the due date, plus interest on cash advances from the day you withdraw. To avoid it, pay the total amount due, not the minimum, every month, and do not take cash advances. If a finance charge already posted, paying the full balance stops new ones from the next statement.
What happens if I pay only the minimum amount due?
Your account stays current and you avoid the late fee, but interest runs on everything left. Under the minimum-due rules banks print, a ₱20,000 balance paid only at the minimum takes 31 to 355 months to clear at 3% a month, with no new spending.
How much interest will I pay on a ₱50,000 balance?
At 3% a month, paying ₱50,000 off in 12 equal monthly payments of about ₱5,023 costs about ₱10,277 in interest. Leaving it unpaid for a year adds about ₱21,288.
How is a credit card instalment computed?
Instalments use a monthly add-on rate on the original amount, capped at 1% a month. ₱30,000 over 12 months at the cap costs ₱3,600 in add-on interest, or ₱2,800 a month. A 0% instalment promo has no add-on.
How much does a credit card cash advance cost?
A processing fee of at most ₱200, with no other fee allowed, plus interest from the day you withdraw. ₱10,000 repaid after 30 days at 3% a month costs about ₱500.
Is 20% interest on a credit card legal in the Philippines?
As a yearly rate, yes: the cap is 36% a year (3% a month). A card cannot charge more than that on purchases or cash advances.
Which credit cards charge less than 3% a month?
BPI Free+ Card (2.5%, limited to some clients), PNB Ze-Lo Mastercard (2.5%). Every other card with a published rate charges the full 3%.
