Credit Cards: Discussion Continues in Guatemala

Regarding the new bill presented to Congress at the beginning of 2019, the Superintendence of Banks is of the opinion that the interest rate should not be limited.

Thursday, May 23, 2019

The Credit Card Law came into force on March 8, 2016, but was suspended at the end of the same month, after business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC). Earlier this year the law was definitively declared unconstitutional by the CC.

See "New Setback for Credit Card Law" and "Guatemala: Credit Card Law Suspended"

On January 30, deputies Arango, Valladares and Monzón, presented a new initiative, which has among its main objectives to establish controls and limits to interest rates and other charges that are currently not fixed.

In a congressional meeting in which authorities from the Superintendence of Banks (SIB) presented their technical opinion on the subject, Raúl Stuardo Juárez, director of the SIB's Regulatory Department, explained to the Congressional Economy Committee that the reasons indicating that limiting credit cards would have harmful effects on the financial market, as well as on the productive apparatus.

Juárez emphasized that "... establishing a limit would generate distortions in the market, especially in the financial sector and the economy in general. Low-amount loans would be affected, and therefore their delivery would be restricted, by fixed costs and 'they are normally more expensive."

The official added that "... clients with a lower income profile will have limited access to credit. They would have to turn to other sources of financing with much higher interest rates, with the risk of losing their assets used as collateral. Finally, competition is reduced, since larger financial institutions are more likely to face distortions.

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More on this topic

Credit Card Law: Progress on New Proposal

December 2019

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.

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.

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.

The proposal for two interest rates was presented by the Instituto de Investigación y Proyección sobre Economía y Sociedad Plural (Idies), before the Congressional Economic Commission, in charge of discussing the proposals for changes to Credit Card Law 5544.

Credit Cards and Regulation

February 2019

Limiting the fees charged in Costa Rica and establishing a law that defines market limits in Guatemala are part of the attempts being made in the region to regulate the use of credit cards.

A law proposal presented last January before the Legislative Assembly of Costa Rica, aims to regulate the percentage of the commission paid by businesses for credit or debit cards.

New Attempt to Regulate Credit Cards

January 2019

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

The Credit Card Law that was declared unconstitutional at the beginning of 2019, entered into force on March 8, 2016, however, after the business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC), was suspended on March 31 of that year.

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