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 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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