Given the difficulties that the Central Bank (BCRA) is having in accumulating reserves, in recent months the Government has tightened the exchange rate and It even prohibited the payment in installments of goods and services abroad. First, in November of last year, it cut financing for trips outside the country. In July, it was the turn of the services of electronic commerce door to door and buy free. Without being enough, as of today the “minimum payment” for transactions of more than US$200 became more expensive.
This last alternative had been promoted by the Executive itself. When they prohibited fees to travel outside of Argentina, the government spokeswoman, Gabriela Cerruti, said: “When they cannot pay that ticket in installments, They can pay it by financing it with the different plans that the credit card has, which has a fairly low rateor with personal credits”.
Although the new regulation does not prevent purchases greater than that amount, the objective of the ruling party is to discourage transactions carried out in foreign currencies. Without the freedom to buy in installments, Argentines were left with two possible paths when paying expenses in dollars: pay in a single payment or finance the credit card with the “minimum payment” of the summaries. If the expense is greater than US$200, this last option has a rate 25% above that of a personal loan.
“The objective of the Government is to restrict access to the official exchange market as much as possible, basically due to the lack of foreign currency from the Central Bank. Even understanding the emergency situation in the country, the solution is not regulation and constant change in the rules of the game”, affirmed Esteban Marzorati, former director of imports of the Nation.
In the case of door-to-door purchases, one of the most recent regulations, the expert stressed that the lack of financing has a direct impact on the regime’s micro-financing. Discouraging the purchase decision of consumers, the business of market players is harmed. “At the country level, the flow that this type of regime can have within general imports is practically marginal”he added.
no fees, the best option that buyers have is to pay the total amount of the product in a single payment. But, in case you have to use the credit card because you do not arrive with all the cash, you can finance the purchase through the “minimum payment”, a strategy that before starting it you have to take into account some fundamental details . Above all, after the new regulationsince nominal interest rates between 21 and 28 points higher than the average are applied.
To get started, each credit card has a different limit, which determines how many pesos can be spent in the month (the amount can differ between one payment and in installments). The limits are granted by each bank, depending on the client’s income and credit history. For example, a retiree with a basic credit card may be limited to $35,000 in one payment and $40,000 in installments, while a merchant with a black reaches $600,000 for both types of financing.
Knowing that limit will allow you to know when the credit card can be used and when not, depending on the item you want to buy. In other words, any purchase that impacts the expiration of the card will be deducted from the limit, which in recent years has been outdated. With a dollar “card” at $240.19, if you have a margin of up to $100,000, it is the equivalent of buying something for less than $416. In this case, it would be affected by the new interest rates.
“The prohibition of paying in installments affects the limits on a payment for those who carry out the type of operations affected. What would be the problem itself? basically that if a person uses up 100% of their limit in one payment, their card becomes unusable”, explained the financial technology Kiwi.
An example, assuming that you have $10,000 as a payment limit and $20,000 to buy in installments. If a $12,000 product is purchased in 12 installments, the payment limit will become $9,000 (the $10,000, minus $1,000 of the first installment) and the limit available in installments will also be $9,000 (the initial $20,000, minus $11,000 of the remaining installments). to turn off). “When the balance remains at $0, it means that no more purchases can be made, despite trying to withdraw in 12, 18 or more installments.. This happens because the fee always needs a balance to exist in a payment”, they explained.
Knowing the limits of the card, In the event that today an Argentine wants to buy an item from abroad and pay for it in different months, he can do so by making the minimum payment on the card. It consists of paying a minimum percentage of the debt, which is required by the bank to maintain the current credit on the card. The remaining balance is refinanced.
If the purchase was less than US$200, the Central Bank raised the rate from 57% to 62% annual nominal. That translates into a effective annual rate (TEA) of 83%, plus the bank commission costs charged by each entity. Instead, if the purchase was greater than US$200, Rates start at a nominal annual 83% and reach up to 100%, depending on the financial institution. In these cases, the effective annual rate varies between 123% and 161%, more than double the original expense.
In short, using this resource constantly can cause major financial problems in the long term. As explained by the BBVA page, the minimum credit card payment represents approximately 10% of the total debt. By delaying the payment from month to month, the debt contracted with the bank extends over time and interest is also accumulated.
“The card minimum is calculated depending on many variables. It is not the same if the purchase is small, as if 100% of the card limit was used. In such cases, the minimums can vary, as well as if it is the first, second or third time that the payment is delayed. It is the most dangerous way to finance yourself. In addition, there comes a point where 100% of the rest (interest and assessed consumption) equals the limit; there, the minimum payment is 100% and there is no escape, that is when people fall out of the system”they closed from iKiwi.