The new law prohibits banks and financial institutions from implementing abusive practices in order to manage debt collection.
From a statement issued by the Congress of Guatemala:
With 108 votes in favor, Congress deputies approved amendments to the Banking Act, with which it prohibited harassment and abusive collection practices on the part of the lenders.
The Superior Court has ordered the temporary cancellation due to lack of a ruling from the Bank of Guatemala, and the fact that Congress gave approval without having a majority, as stipulated by law.
The Constitutional Court (CC) has provisionally suspended the Credit Card Act, which came into force on March 8. Gloria Porras, president of the CC, told Prensalibre.com that one of the major failings was that Congress did not pass the Law with 105 votes, which is defined as a majority.
On the same day of its entry into force, the employers' union filed a constitutional motion against it, arguing that it adversely affects the freedom of the financial market.
For the second time a motion has been filed to temporarily suspend the enforcement of the law, with arguments once again made that the relevant processes were not followed and that its application will have adverse effects on the Guatemalan financial market.
The appeal filed against the law establishing ceilings on interest rates charged by card issuers has been rejected by the Constitutional Court.
The Constitutional Court (CC), rejected the appeals filed against the Credit Card Act , presented in January by the Association of Banks of Guatemala (ABG), the Association of Card Payment Issuers (AEMPG) and Deputy Ronald Arango, reported Republica.com.gt.
Unconstitutionality lawsuits filed by banks and the Association of Payment Card Issuers may postpone the enforcement of the law, which was scheduled for March 2015.
The actions claiming unconstitutionality argue that when approving the controversial law, Congress did not follow the relevant processes, including the inclusion of the opinion of the Monetary Board on the part of representatives.
The controversial law limiting interest rates charged by credit card issuers was sanctioned by President Maldonado and will take effect on March 8, 2016.
Despite the request of the financial sector to veto the new law , president Maldonado decided to sanction it, and now the Superintendency of Banks will have to issue the necessary regulations for its implementation.
Issuers have objected in particular to the cap on interest that can be charged, citing an increased credit risk and a reduction in the number of cardholders.
An article on Lahora.gt reports that "... Roberto Fuentes, of the Association of Credit Card Issuers of Guatemala (AEMPG), said the Credit Card Act does not have the technical basis necessary to actually have a positive effect on users.
The new law will prevent usury and harassment of users, but will also affect consumers and business activity by leaving at least 500,000 Guatemalans without access to this payment method.
Decree 7-2015 of the Law on Credit Cards, approved by the Guatemalan Congress will come into force in three months time and will put a cap on interest rates that can be charged by card issuers, the procedures used to collect from defaulters, but at the same time will limit access to an important method of payment.
The interest rate charged by issuers cannot exceed the "double of the amount of the value corresponding to the average weighted annual interest rate in the banking system."
From a statement issued by the Congress of Guatemala:
With 96 votes, the deputies to the Congress of the Republic approved a total replacement amendment aimed at regulating credit card interest rates ; Article 10 of the 4651 bill.
45% of Costa Ricans prefer to pay with cash than use debit cards, despite the fact that nearly 8 out of 10 possess this means of payment.
According to the latest study by the World Bank (WB), 53.6% of people over 15 years old in Costa Rica have at least one debit card, placing the country in fourth place in Latin America, just behind Brazil , Puerto Rico and Chile.
In April 2013 the credit card portfolio in the country grew at a rate of 24%, well above the 10% growth recorded in the same month this year.
The slowdown in economic activity, greater awareness in the use of debt and changes in the regulations requiring risk ratings from the banking system are some of the reasons behind the decline in the growth rate of the number of plastic cards circulating in the country.
Although equivalent to 85% of GDP, analysts say the portfolio of bank loans to the private sector is at healthy levels and can grow further.
At the end of 2014 bank lending to businesses and households in the country amounted to $46,212.6 million, well above the amount of public sector debt, which closed in 2014 at an amount equivalent to 39.4% of gross domestic product (GDP).
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%.
Mortgage loans and loans for the purchase of vehicles, as well as financing through credit cards are the most dynamic categories in the banking system's loan portfolio.
In the period up until January 2015 it was reported that Panamanians owed approximately $25 billion in personal loans. The balances on credit cards and personal loans recorded an increase of 15.6% compared to January 2014.