Salvadoran Banks Warn of Fewer $1.000 Credit Cards

According to ABANSA, the proposed maximum 22% rate would affect credit cards with a $1.000 limit or less, 59% of the market.

Friday, July 24, 2009

The Salvadoran Banking Association, known as ABANSA, warned of fewer supply of credit cards with less than $1.000 limit, if the credit card law proposal being studied is approved. With the 22% maximum interest rate, according to them, banks would not be able to cover the costs of providing this service for small amounts, as operative and irrecoverable costs increase significantly in this market segment.

ABANSA studies indicate that in the $500 or less segment, funding, operations and delinquency costs can reach up to 60%.

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Banking Sector Against Credit Card Law Reform

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The Salvadoran Banking Association is opposing the adoption of a reform which sets a ceiling on interest rates that can be charged for credit card use.

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Salvadoran Banks Oppose Fixing Interest Rates

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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.

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