Costa Rica: Objections to Proposed Cap on Interest Rates

The Board of the Central Bank says that any attempts to control prices and restrict competition will drive the informal economy.

Monday, September 30, 2013 reports that "The Government submitted, in late August, to the Legislative Assembly a Bill on Consumer Rights in relation to Usury in Credit Cards."

"... The initiative defines as usury loans rates which exceed twice the average of the last three months of the average lending rate of National Financial System, calculated by the Central Bank. Currently, the rate in colons is 15.88%, therefore that the cap would be of 31.76%. Anything over this would result in intervention by the Ministry of Economy, Industry and Commerce (MEIC) to regulate the market. "

Among the negative consequence of a rule like the one proposed by the MEIC, is that it would "constitute a setback to the efforts to increase bankarization levels of people in the financial system."

More on this topic

Costa Rica: Plastic Money Market

March 2015

72% of the credit and debit cards circulating in the country have interest rates in colones ranging from between 40% and 50%, while the default interest varies from 24% to 65%.

From a statement issued by the Ministry of Economy, Industry and Trade (MEIC):

The Ministry of Economy, Industry and Trade (MEIC), through the Directorate of Economic and Market Research, presented a study on debit and credit cards in which it was determined tha 72% of cards existing in the market have interest rates in colones, ranging from between 40% and 50%.

Costa Rica: Law on Secured Transactions Approved

May 2014

Mortgage inventories, cash flow, contracts, intellectual property, trademarks, among others, can be used as an alternative option to traditional collateral on real estate.

Additionally, the law passed by the Legislature on April 30, also allows for current assets or rights given in contracts, equipment, accounts receivable, chattels, crops, tourist bookings and even future rights to the value of timber to be taken into account. The bill is awaiting the signature of the President of the Republic, and subsequent publication, and the issue of the relevant regulations by the General Superintendence of Financial Entities (SUGEF).

The Credit and Debit Cards Market in Costa Rica

April 2014

As of January 31st 2014 the number of cards in circulation amounted to 1,729,945.

From a press release issued by the Ministry of Economy and Trade:

In the past 18 months, Costa Ricans in total increased the debt balance of their credit cards by on average 1% per month, the equivalent of more than $7.2 million every 30 days, as confirmed by the latest survey by the Directorate of Economic and Market Research at the Ministry of Economy, Industry and Commerce (MEIC).

Caps on Interest Rates in Costa Rica

August 2013

A bill proposes to limit interests on all forms of credit, prohibiting setting interest rates unilaterally.

A press release from the Ministry of Economy, Industry and Trade of Costa Rica reads:

The President of the Republic, Laura Chinchilla Miranda, Vice President Luis Liberman and the Minister of Economy, Industry and Trade, Mayi Antillon Guerrero, today introduced a bill that seeks to establish limits to define credit usury, through the establishment of economic indicators that would be adjusted periodically.

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