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%.

More on this topic

Banks Request Tax Fairness In Investment Funds Act

March 2013

A bill under study in El Salvador provides for a 10 year exemption on paying income tax for individuals who invest in mutual funds.

The banking sector, through the Salvadoran Banking Association (Abansa), supports the draft legislation which regulates the running and creation of investment funds, but is calling for equal tax treatment.

Access to Credit Histories in El Salvador

December 2012

Salvadoran banks want restrictions to be eliminated so that all financial institutions can share and have access to positive or negative credit histories of their customers.

Elsalvador.com reports that "The Credit Bureaus Act provides in Article 14 that the credit history of customers or consumers can only be supplied to operators with their 'express written consent'."

Banking Sector Against Credit Card Law Reform

September 2011

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.

Private banking sector representatives noted that the changes were approved without having performed prior technical analysis and this threatens their legal certainty.

Salvadoran Banks Oppose Fixing Interest Rates

July 2009

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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