Credit cards are the gateway credit houses. However, the price hike and the related rate hike have managed to hit this type of financing: last month, the use of plastic grew by just 1% in nominal terms, which represents an effective drop of more than 5%.
According to data from the Central Bank, the sharp drop can be seen in the year-on-year comparison: compared to the balance in February last year, the stock of pesos financed by cards barely grew 73%when the inflation for the period will be positioned above 100%. It frames the lower use of plastic to finance current household expenses credit crunch to the private sector.
This segment, which includes credit cards and personal loans, contract for the 14th consecutive month in Februaryand ended the month with a drop of 2.7% than what he had written in January. Compared to the February 2022 photo, household financing contract more than 15% regarding the price increase.
Underlying this phenomenon, the great factor is the unstoppable increase of inflation affecting the purchasing power of wages. But also other factors, among which they stand out failure to update credit ceilings from banks.
The entities believe that the paper business it is no longer as profitable as lending to the state and since the 2020 pandemic they have begun to “adjust” access to these products.
Guillermo Barbero, Partner of First Capital Group, explained: “February should be the month during which credit limits are more outdated due to the fact that the parity increases have not yet been reflected in payrolls and that the banking institutions have not activated the mechanisms to review them”.
¨The acceleration of the inflationary pace makes it necessary to update the credit limits more frequently in order to maintain the spending level of cardholders – added Barbero. are not reflected in a more significant growth in balances“, he indicated.
With several indicators advancing a consumption freeze this year, despite being a pre-election moment, the outlook for the rest of 2023 I’m not recovering for this sector.
“A scenario of less activity such as that which we expect for the current year will have a direct correlation with the trend in loans. This is added a higher and lower financing cost product of a high interest rate and the uncertainty of an election year,” they explained to consultancy firm LCG.
With increasingly tight summaries and rising ratesalso the end of the so-called “interest-free installments” explain this phenomenon. LGC economists believe that if the government faces consumer stimulus programs in the previous election, the situation could partially improve. “Throughout the year, there may be periods of better momentum as a result of isolated consumer promotion policies such as the ‘Ahora 30,'” they said.
On the contrary, and despite the increase in the dollar for tourists, consumption with dollar cards grew last month. In February they signed up an inter-year increase of 17.2%, albeit with an irregular monthly trend. At the same time, there has been an increase in more than 12% compared to what was recorded a month ago.
“Travel abroad has reactivated this item but the application of differential exchange rates for the use of the card in foreign currency limits its use and today it is in values far below than usual in pre-pandemic times,” added Barbero.
Source: Clarin
