Within the framework of its strategy to continue limiting the loss of dollars for credit card consumption, the BCRA raised the rate applied by banks
By Pilar Wolffelt
07/28/2022 – 5:18 p.m.
The Board of Directors of the Central Bank of the Argentine Republic (BCRA) increased the cost of financing through the summary (that is, choosing the possibility of not paying in full) purchases in dollars with a credit card by applying a higher rate to unpaid balances of consumption in dollars that are made with the plastics issued by financial entities when the amounts are greater than US$200.
Likewise, raised from 57% to 62% (with an increase of 5 percentage points) the rate that applies to the financing of credit card statements up to $200,000 per monthin line with the rate hike applied by the entity this Thursday, which was 8 percentage points.
What was arranged is that the rate regulated by law is applied (which is 25% more than the rate that the issuer applies to personal loan operations) for purchases in dollars with a card and it was established that financial institutions must notify cardholders before applying this measure.
The BCRA has been concerned about the growth of expenses in dollars with cards.
Dollar card: how expensive is financing
Taking into account that the rate of personal loans is usually around 66%, it is estimated that this percentage that will be applied from now on will be around 82.5%, so it would be 20% more expensive to finance purchases in dollars through the card summary of credit than those made in pesos.
So set it Law 25,065 on Credit Cards in its article 16, specifies how the compensatory or financial interest is calculated by specifying that “the limit of compensatory or financial interest that the issuer applies to the holder may not exceed the rate that the issuer applies to personal loan operations in current currency for clients by more than twenty-five percent (25%). In the case of non-bank issuers, the limit of compensatory or financial interest applied to the holder may not exceed the average rate of the system for personal loan operations published from the 1st to the 5th of each month by more than twenty-five percent (25%). the Central Bank of the Argentine Republic.
Likewise, the norm maintains that the issuing entity must obligatorily display to the public in all the premises the financing rate applied to the Credit Card system, for which the BCRA ordered in this new provision thatFinancial institutions must notify cardholders (who are the card holders) before applying this measure.
Let us remember that in this “bag” of expenses of card payments in dollars Payments to suppliers abroad are included and not only those made in the framework of purchases by tourists abroadTherefore, by making their financing more expensive, it can affect the cultural consumption of users, such as through Netflix, which is paid in dollars abroad.
The BCRA seeks to make dollar card operations more expensive to discourage its use.
The reasons of the BCRA for this measure
The measure responds to the Government’s concern that, in the first five months of the year, to the BCRA they escaped by the side of expenses in dollars with card about $1.5 billionaccording to the latest Report on the Evolution of the Foreign Exchange Market published by the entity. It is also true that somehow the existence of that exchange rate it subsidizes the sectors with the highest purchasing power, which are those who can travel abroad and, although they pay 75% taxes at the time of consumption, they later obtain a 45% refund of Profit perception.
For those reasons, Many times it has been predicted from different sectors of the market that the BCRA would have changes in the process of canceling consumption in dollars with a card. Many rumored that it could be established that they be paid through the MEP dollar and not at the solidarity price as up to now, but such a measure could not be taken without reforming the Card Law, which requires a passage through Congress.
That is why the Government has been taking measures in other ways that discourage the use of credit cards for purchases and payments in dollars. And so this latest resolution is added to the following decisions that have been taken in recent months in this same sense, which basically put put an end to the possibility for financial entities and non-financial credit providers (which are those companies that, without being financial entities, offer credit to the general public) definance their customers’ purchases in installments in:
- Tickets abroad and tourist services abroad (such as accommodation, car rental, etc.).
- Products abroad that are received through the postal system for non-commercial purposes.
- Products in duty-free shops.
- Duty-free shops, known as FreeShops.