What is the maximum legal interest rate in the Philippines?
Last updated: 2026-05-04 · Educational content; not legal advice.
Short answer
BSP Circular 1133 (2021), as extended by Circular 1165 (2023), caps the nominal interest at 6% per month and the all-in effective interest (including penalties) at 15% per month for short-term, low-value loans (unsecured, up to ₱10,000, tenor ≤4 months). The Usury Law's ceilings were suspended by Central Bank Circular 905 (1982), but courts may still strike unconscionable rates under Article 1306 of the Civil Code (Medel v. CA, G.R. 131622, 1998).
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Frequently asked
Does the cap apply to BNPL?
BSP Circular 1133 covers general-purpose, unsecured consumer loans up to ₱10,000 with tenors of ≤4 months. BNPL providers regulated by BSP are bound by that cap directly; for BNPLs and loan apps run by SEC-supervised lending or financing companies, SEC Memorandum Circular No. 3, Series of 2022 is the operative hard ceiling — it implements BSP Circular 1133 with the same limits on covered small loans: nominal interest ≤6% per month, effective interest (EIR) ≤15% per month, penalties ≤5% per month, and total cost of the loan capped at 100% of the principal.
What if the lender charges 30% per month?
That exceeds Circular 1133's 6% nominal monthly cap and is a documentable violation. File simultaneously with the SEC (for SEC-registered lenders) or BSP (for bank-affiliated lenders) and request refund of overcollected amounts.
Are pawnshop interest rates capped?
Pawnshops are regulated under PD 114; the BSP's pawnshop rules require posted interest rates and a maximum service charge of 1% of the principal per month, separate from the interest.
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More questions
Does the cap apply to BNPL?
BSP Circular 1133 covers general-purpose unsecured consumer loans up to ₱10,000 with tenors of ≤4 months. BNPL providers regulated by BSP are bound by the same cap; SEC-only BNPLs follow SEC MC 3 (2022) disclosure rules.
Can courts strike rates above the cap?
Yes. Civil Code Art. 1306 lets courts void unconscionable rates; Medel v. CA (1998) and subsequent cases have struck 5%–10% per-month rates as void.
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