Credit Card Law: Progress on New Proposal

Last December 2, the new Credit Card Law proposal received a favorable opinion from the Economy Commission of the Guatemalan Congress, and now it should be discussed in the plenary session.

Wednesday, December 4, 2019

This is the second attempt made in the country to regulate the credit card market, since on March 8, 2016 a law came into force, which was suspended weeks later, because the business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC). At the beginning of 2019 the law was definitively declared unconstitutional by the CC.

Unlike the law that was declared unconstitutional, the new proposal to be discussed in Congress does not set a cap rate.

Congressman Carlos Barreda, president of the Economy Commission, told that "... most of the sectors consulted for the analysis of the bill agreed that it would be unconstitutional to establish a cap rate. That is why they decided to issue other types of regulations."

See "Credit Cards: Proposals to Regulate the Market"

The article states that the new proposal establishes that there will be two types of fees, "... one is the fixed fee which would be freely agreed between the issuer and the cardholder. This cannot be modified during the term of the contract, unless it is in the benefit of the cardholder. The other modality is the variable rate, which may also be freely agreed between both parties, but may be revised every six months. Here the issuer may modify it, but only every six months and has the obligation to give the notice to the user 45 days before it comes into effect, explains the parliamentarian when referring that the intention of that period is that the user can decide whether to continue with that card."

If the current bill is approved, it will prohibit the capitalization of interest, and it will not be possible to calculate commissions and other charges. If a payment agreement is signed, the interest can be considered as part of the capital of the new debt.

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Credit Cards: Proposals to Regulate the Market

August 2019

Implementing a mixed system of interest rates composed of a fixed one with a contract for a determined time and another variable agreed between the account holder and the issuer, is one of the proposals that are discussed in the Congress of Guatemala.

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After the law seeking to regulate the credit card market in Guatemala was declared unconstitutional, a new proposal was presented.

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