From today it will be more expensive to finance with a credit card, both in pesos and in dollars

Inflation forced the entire rate scheme to rise Photo: Adrián Escandar

From today, canceling the minimum credit card payment in pesos and leaving the balance to pay in the following months will be more expensive. By a decision of the Central Bank, the maximum rate that banks can charge for this financing will grow by 5 percentage pointsso it will go from 57% to 62% for all card summaries whose amount does not exceed 200,000 pesos.

The measure, decided last Thursday at the BCRA Board meeting but which begins to take effect today, is linked to the strong increase that the BCRA decided for the monetary policy rate, which last week jumped from 52% to 60 percent. The rise in that reference rate impacts the entire system, making all kinds of credits more expensive for families and companies.

In the particular case of credit cards, the maximum rate that the BCRA sets for “compensatory interest” Its objective is to limit the cost that banks charge to their clients who want to finance a part of what is spent with their plastics. The constant advance of inflation forced this limit to be raised.

The rule of the presiding entity Miguel Pesce arranged “replace, with effect from the billing cycle corresponding to August 2022, at 62% annual nominal the limit on compensatory interest for financing linked to credit cards”.

From today it will also be more expensive to finance expenses in dollars with a credit cardin the event that the summary in foreign currency exceeds the amount of USD 200 in the month. This increase will be applied with another mechanism. Until now, every time someone made the minimum payment in dollars and decided to finance the balance, the maximum interest rate applied was the same as in pesosthat is, a maximum of 57% (now raised to 62%).

The Central decided that from August another rate will be applied that also has a cap, albeit much higher. This is the limit provided for in the Credit Card Law. In that rule, it is provided that the maximum rate “may not exceed by more than 25% the rate that the issuer applies to personal loan operations”. For example: if the bank charged 10% for personal loans, it cannot charge more than 12.5% ​​to finance card balances.

In that way, those who spend more than 200 dollars in the month will no longer enjoy the advantage of that cheaper financing. In fact, they will go from paying a rate of 57% to a higher rate of 83%, which according to the BCRA is what banks charge on average.

It should be noted that this BCRA decision does not limit the amount of dollars to spend with the card but it fixes a more expensive interest to finance itself.

The card and plan Now 12

The increase in the cost of financing with a credit card will impact consumption and is added to another ingredient shown by the plastic money market: due to the effect of inflation, installment plans are being shortened. For the Argentine consumer, it is becoming increasingly clear that paying in installments is only convenient when rates are below inflation. Retail chains don’t want to lose either and are constantly changing their plans.

Photo: NA
Photo: NA

The scenario consolidates the use of Now 12, the official plan with rates subsidized by the government to pay in installments for consumption of all kinds, from an appliance to a bus ticket. The current stage of the program, announced on July 1st and in force until January 2023, foresees a rate of 42% for financing in 3, 6 and 12 installments, and 49% for the acquisition of goods and services in 18 and 24 installments.

According to data from Prisma Medios de Pago for the second quarter of the year, today the Now 12 plan represents 25% of total credit card spending. Before the pandemic, it was barely over 10 percent.

“The Plans Now continue their growth trend in the share of credit card consumption, being Now 3 and Now 6 the ones that have been increasing their participation to a greater extent”, he pointed Julian BallarinoHead of Institutional Relations of the payment processor.

According to the Prisma Means of Payment Index for the second quarter, which did not include the deterioration of the financial scenario after the resignation of Martin Guzman to the Ministry of Economy, which occurred in July, The use of 3 and 6 installment plans grew while those of 18 and 24 fell.

Source: Prisma Means of Payment Index
Source: Prisma Means of Payment Index

The report also indicates that the number of transactions with credit and debit cards grew by 10% and 23%, respectively, compared to the same quarter of 2021.

“In the second quarter of the year, The items with the highest year-on-year growth in transactions with credit, debit and prepaid cards were Travel, Tourism and Airlines with 48%, Restaurants 63% and Clothing with 54%Ballarino pointed out.

“Debit card purchases remain above 50% of the general volume of that type of cards for the third consecutive quarter,” he added.


The Central Bank tightened the conditions to finance consumption with a credit card in dollars
The Central Bank also raised the rate to finance itself with credit cards in pesos and for loans to SMEs
“Green fever”: consumption in dollars with credit cards tripled in June

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