THERE'S a credit-card horror story that’s become some sort of an urban legend: A television personality, after losing his job in a top network, resorts to using his plastic money. By the time he finds employment in the rival network, he has wracked up P58,000 in credit card bills. But he figures he’s not yet ready to pay in full, so he pays just the minimum amount due. Yet after five years, he is shocked to realize that his credit card debt had ballooned more than 10 times to P700,000.

There are variations to this dark tale — mysterious taxes and fees imposed on unsuspecting credit card holders, or the unexplained fine print in credit card contracts that say the consumer ends up paying double, if not triple, the advertised interest payment, and the incessant phone stalking by pesky credit card collectors who call to say it’s past the due date.

These are the stuff nightmares are made of in this cyber age of paperless transactions. And from all indications, this is becoming a shared terror among more and more middle-class Filipinos. A growing number of them are getting buried deeper in credit-card induced debt and, given the poor state the Philippine economy is in right now, are not likely to get out of the rut anytime soon. As of March, credit cardholders’ past due debts had reached P8.3 billion pesos. Borrowings had risen 41 percent in 2002 from 2001.

Consumers are blaming credit card companies and their alleged penchant for deception and false advertising. There have been several complaints lodged with the Bangko Sentral ng Pilipinas (BSP), regulator of the credit card business, about the lack of transparency and nondisclosure of credit card companies. What exactly goes into a credit card bill? That’s what many want to know, since the credit card companies are either aren’t saying much, at least not up front, or keep talking in unintelligible language.

Citibank, for instance, explains most of its charges at the back of each bill it sends to its cardholders. But some of those who bothered to read the explanations say they didn’t come away particularly enlightened. Nothing in the bill also makes it clear that the 3.25 percent interest — advertised as monthly interest rates — are actually charged every 21 days. This means that in a year, the credit card company charges interest 17 times, not 12, for a compounded total of some 56 percent interest. Last April, Citibank began imposing a 10 percent value added tax or VAT, retroactive to January 2003, on interest. This translates to a total interest rate of 3.575 percent.

Try not paying a P70,000-bill. In three months, your outstanding debt to the credit card company will be more than P80,000; this will reach P99,000 in nine months and will be well above P120,000 after a year. No way can ordinary office workers or employees afford such usurious rates, which are tantamount to a slow and silent financial strangulation. Small wonder that many who have wracked up credit card bills, like the television personality, have learned to ignore the letters, faxes, and calls from debt collectors, and look at themselves as victims of a well-entrenched scam. But there are also brave ones who settle their obligations with representative banks, some of whom are all too willing to accept what the lowly cardholder can afford to pay.

Filipinos are not the only ones who feel that they’ve been duped. In the United States, where credit card debt is more like a national plague, a New York court is now hearing 20 consolidated class action suits against Visa and MasterCard, as well as the banks that represent them. The main accusation is that the two biggest credit card companies and their affiliates conspired to set credit card fees for transactions made abroad, and concealed them from their cardholders. A similar case was heard earlier in California, where a court ordered Visa and MasterCard to refund customers for secretly charging them currency exchange fees.

In the Philippines, consumers have yet to go to the courts. There are no clear-cut guidelines and standards against which to assess the behavior of those engaged in the credit card business. But given the deluge of complaints, the BSP has promised to issue a circular by August that will contain such rules. “The focus of the forthcoming circular is better disclosure of what’s going on in the credit card bill,” said BSP Assistant Governor Nestor Espenilla. “We want more transparency and better handling of complaints.”

Consumers are waiting for the BSP pronouncements to take effect this time around. Same time last year, the agency issued a similar circular to prevent what was then the already alarming rise in past-due loans. In March last year, credit card loans accounted for half of the entire banking system’s accounts receivables. The BSP wanted credit card companies to be more selective in choosing prospective cardholders, and to limit borrowings based on net salaries. This seems to have failed. Credit card companies are more aggressive than ever in marketing and in devising ways to make the consumer sign up and swipe - the enticements include free air miles, free gifts, discounts. One credit card company has even gone as far as offering free cell phones to cell-phone crazy Filipinos.

This is not to say that it’s all the credit card companies’ fault. Consumers are supposed to live within their means, use credit cards responsibly, and pay their debts promptly. Given a 3.25-percent monthly interest, which is what Citibank offers, consumers should know that this amounts to a 56-percent annual interest, much more than the neighborhood bumbay offers with his 5-6 deal. Your credit card officer will tell you that if you pay on time and in full, there are no burdensome charges to face at all.