Credit Cards: Proposals to Regulate the Market

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.

Wednesday, August 21, 2019

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.

See "Credit Cards: Discussion Continues in Guatemala

Silvana Zimeri, director of Idies, explained to the Commission that "... The idea is to leave a fixed interest rate throughout the contract and a variable rate that would depend on the market, composed of a variable element by means of the weighted average interest rate that is 23% in consumption. For example, that the variable rate be double, that is, 46%, but there is no analysis of the market rates to find a reference, so that there are no over-interest rates."

Regarding the variable rate, the proposal considers that it can be reviewed every six months with the reference of the weighted average of consumer credit.

Christian Nolck Rodríguez, vice-president of the Finance Chamber of Guatemala (CFG), explained to Prensalibre.com that "... although he is not aware of the proposals discussed in the Commission, they support initiatives related to the free market, economy and good supervision. From the two alternatives there is a good agreement that can reach an appropriate term to provide a guarantee to the customer in a certain time with fixed rate or based on market conditions have a range."

After receiving the proposals, the Commission will have to work in the coming weeks on the final opinion of the proposed law.

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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: Discussion Continues in Guatemala

May 2019

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.

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).

Honduras and Credit Card Regulations

May 2017

Without reaching a consensus with the financial sector, the deputies said that the bill will set the maximum interest rate that can be charged on credit cards at 54%.

The agreement reached by the Honduran Association of Banking Institutions and the committee of deputies working on the bill was rejected by President Hernandez, and since then, the negotiation process has stalled. 

Central Bank Rejects Setting Maximum Interest Rates

September 2009

In El Salvador, opponents of the law are proposing a maximum credit card interest rate controlled by the Central Bank.

Authorities from the Central Bank (BCR), the Superintendence of the Financial System and the Consumer Defense Directorate, presented a new law proposal to the Legislative Assembly.

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