The Central Bank has tightened the conditions for financing consumption with a credit card in dollars
Canceling the minimum credit card payment in pesos and leaving the balance to be paid in the following months is more expensive from this Monday. By decision of the Central Bank, the maximum rate that banks can apply for this loan has been increased by 5 percentage points, therefore, it will go from 57% to 62% for all card statements whose amount does not exceed $ 200,000.
The decision was made public last Thursday, after the last meeting of the Board of Directors of the Central Bank, but has been in effect since Monday. The organization advanced with an increase in monetary policy rates of 800 basis points, for which the cost of borrowing went from 52% to 60% per year. This increase makes lending to households and businesses more expensive.
In the particular case of credit cards, the maximum rate that the BCRA sets for the “Compensatory interest” Its goal is to limit the cost that banks charge to their customers who want to finance a portion of what is spent on their plastic. The steady rise in inflation has forced this limit to be raised.
The provision of the body chaired by Miguel Pesce ordered “to replace, with effect from the billing cycle corresponding to August 2022, the 62% nominal per year the limit of compensatory interest for loans linked to credit cards “.
From now will also be more expensive to finance expenses in dollars by credit card, if the summary in foreign currency exceeds the amount of US $ 200 in the month. This increase will be applied by another mechanism. Until now, whenever someone made the minimum dollar payment and decided to finance the balance, the maximum interest rate applied was the same as for pesos, i.e. a maximum of 57% (now raised to 62%).
The Central has decided that from August another tariff will be applied which also has a cap, albeit much higher. This is the limit set by the Credit Card Law. This rule provides that the maximum rate “may not exceed the rate that the issuer applies to personal loan transactions by more than 25%”. For example: If the bank charges 10% for personal loans, it cannot charge more than 12.5% to fund card balances.
Sothose who spend more than US $ 200 per month will no longer be able to finance themselves at this maximum rate of 62%but they will go for the rate regulated by the law on credit cards which in the system is on average 83%. But when the total financial cost is applied to that rate, it jumps from 83% on average to around 170%.
“The Board of Directors of the Central Bank of the Argentine Republic has ordered that the rate regulated by law be applied to credit cards issued by financial institutions when the summary of the monthly account records consumption for an amount in foreign currency greater than 200 dollars” he reported the entity chaired by Miguel Pesce.
“Financial institutions must advise cardholders before applying this measure. “Financing of summaries of up to 200,000 pesos per month will maintain the maximum rate set by the BCRA, of 62% “.
This increase covers all consumers who spend more than $ 200 per month. For example, if someone spends $ 50,000 and US $ 201 and funds the card payment, the regulated rate of 83% on average, including expenses in pesos, is applied to the entire bank statement, including expenses in pesos, while those who spend $ 199,000 and US $ $ 190, you can still access the 62% rate.
Therefore, people using the card abroad and not paying the full summary, will end up facing, provided they have spent more than 200 USD, the regulated rate, which with the increases applied by the banks is close to 170%.
The increase in the use of credit cards can change household consumption habits. According to the latest report by Prisma Medios de Pagos, due to the increase in inflation, Plans Now’s incidence in consumption with plastic increases.
“Planes Now continues the trend of growth in the share of credit card consumption, with Now 3 and Now 6 having increased their share to a greater extent,” said Julián Ballarino, head of institutional relations for the payment processor.
Source: Clarin
