A credit card law proposal being studied by the Legislative Assembly would set a maximum interest rate of 22%.
Both the Banking Association of El Salvador (ABANSA), and the National Private Enterprise Association (ANEP), support the creation of a credit card law, that would provide greater transparency to the market, but disagree in regulating interest rates.
It will regulate the relationship between cardholders and issuers, by defining rules regarding contracts and interest rates.
With the new law, interest rates shall not be more than 10 points above the effective weighted average rate calculated by the Central Bank.
Guadalupe Hernández writes in Elsalvador.com: "For example, the average interest rate for a one year loan is 9.2%, so credit card rates could not be above 19.2% with the new law. However, in reality issuers charge interest rates that fluctuate from 29% to 38.9% for a $1.000 loan."
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