At a regional level, nearly 16 million people are looking to purchase financial services online. Of this group of consumers, approximately 11% are exploring options for acquiring a credit card.
The interactive information system developed by CentralAmericaData, monitors in real time the changes in consumer habits in all markets of the region, with fundamental information to understand the new commercial environment that has emerged in an accelerated manner.
The number of cards in circulation grew by 13% between January 2017 and the same month in 2018, while the balance of debt on credit cards increased by 14% in the same period.
According to a quarterly study on credit and debit cards for 2018, with a cut off point of January 31, on average each person has two credit cards and three debit cards.
In 2010 average household debt per household was around $3,000, and last year, just six years later, the figure exceeded $6,500.
Data compiled by Nacion.com shows that the average debt of each Costa Rican household indicated in the analysis only takes into account financing with supervised entities, meaning that it could be be omitting loans taken out for consumption through other sources of unregulated financing, such as pay day lenders and pawn shops, among others.
In the first quarter of 2016 cardholders delinquencies decreased, but the total arrears remains at a relatively high percentage of 10.3%.
From a report issued by the Ministry of Economy, Industry and Commerce (MEIC):
Study on Credit Cards
- Balance of debt on credit cards up to 31 January recorded an increase of 7.15% over the previous quarter.
- The average balance of outstanding card debt is ¢398,000 colones.
Between December 2013 and December 2014 loans to cardholders increased by 27% while the number of inhabitants having possessing at least one card reached 800,000.
At the end of 2014 it was reported that 800,000 Nicaraguans who are cardholders have on average two credit cards. In the same period, the banks of the National Financial System approved a total of 810,000 loans with credit cards, and reported that about 45% of all registered purchases were paid for using plastic money.
The increase correlates to an increase in the number of merchants affiliated to credit card systems, the growth of the purchasing power of Nicaraguans and increased bancarisation.
According to a report by the Superintendency of Banks and Other Financial Institutions (Siboif), "... The amount of loans made in the form of credit cards increased by 2.9% inter annually reaching a total of 638.630 loans up to December 2013 equivalent to $227 million (C$5829.4 million). "
A comparative analysis of fees and nominal annual interest rates for the first week of August 2013 on credit and financing cards.
From information published by the Consumer Authority of Panama:
Background
"Credit Card: An instrument which is magnetic, electronic or using other technology from the execution of a credit agreement previously concluded between a financial intermediary and another person, in order to facilitate the lease of or to obtain goods and services or obtaining cash from business affiliated to the system. "
A bill proposes to limit interests on all forms of credit, prohibiting setting interest rates unilaterally.
A press release from the Ministry of Economy, Industry and Trade of Costa Rica reads:
The President of the Republic, Laura Chinchilla Miranda, Vice President Luis Liberman and the Minister of Economy, Industry and Trade, Mayi Antillon Guerrero, today introduced a bill that seeks to establish limits to define credit usury, through the establishment of economic indicators that would be adjusted periodically.
A bill seeks to regulate the information provided by issuers to consumers, and another one sets caps on interest rates.
The first project proposed was by Congressman Luis Fishman, who suggests protecting consumers without affecting free competition among companies, obtaining a reduction in fees and costs.
"There must be regulation for all matters relating to the costs and burdens that are included on the cards, which in many cases are not duly explained to the customer, and contribute to the steady growth of debt and being in arrears" he said.
Between April 2012 and the same month this year, the credit card portfolio of state banks grew by 8.5%, while among private banks the increase was 33%.
The increase in the private sector is not surprising, since Banco Promerica alone has 35 types of credit card rates, being the issuer with the most diversity in the country. The dynamism is also reflected in income from fees which the banks charge for the use of plastic, accounting for 46% of total revenues.
The new Credit Card Act establishes that the users will pay interest on the outstanding balance and not on the entire amount of the original loan.
Among the reforms to the Credit Card Act, approved on its second reading by the Congress of Honduras, was the prohibition of issuers charging interest on interest. Users have to pay interest on their outstanding balance and not on all of the original loan, as was previously charged.
A passive base rate in excess of 12% would be problematic, affecting the behavior of borrowers and is likely to cause an increase in defaults.
The Passive Base Rate (PBR) reached 10% on May 9, a level not seen since October 2009. The banks set their interest rate according to the PBR and charge an additional margin. It is estimated that there are 400,000 public bank transactions related to this indicator, reported Elfinancierocr.com.
Consumer budgets are still healing from the economic crisis, delaying a recovery in credit card lending.
Almost 60.000 credit cards were cancelled during 2008 and 2009, half of them for delinquency by their owners. Many others maxed out their credit and cannot use their cards anymore.
The new credit card law seems to make things even worse, as it requires consumers to have a certified income of at least $500 in order to apply for a credit card.
Between January and September 2009, credit card companies issued 6.442 cards, 41% less than the same period of 2008.
This was mostly caused by banks imposing considerable restrictions to credit.
A report by APC, the Panamanian Credit Association, added: "The number of active credit cards dropped 3.2%. In September 2008 there were 568.919 active credit cards, and in the same month of 2009 there were 550.917", reported Prensa.com.
A MEIC study found that credit card issuers charge interest rates between 20% and 54%.
There are 27 issuers in the country, whom collectively offer 407 different products, according to the study by the Economy, Industry and Commerce Ministry (MEIC).
The most expensive credit cards are: Compra Facil, issued by Medio Pago (54% interest rate), Vista International issued by BCT (50.4%) and Master Card issued by Citi (49.32%).