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.
An analysis of costs, interest rates and annuities on credit cards and other financing cards issued in Panama to February 2015.
The study by the Authority for Consumer Protection and Antitrust indicates that the average interest rates for credit cards and other financing ranges from 7.5% in the case of Visa Platinum card Coop. S / M Professional RL, and 24.82% for the classical or traditional Cashback Visa card, issued by Banistmo.
As of January 31st 2014 the number of cards in circulation amounted to 1,729,945.
From a press release issued by the Ministry of Economy and Trade:
In the past 18 months, Costa Ricans in total increased the debt balance of their credit cards by on average 1% per month, the equivalent of more than $7.2 million every 30 days, as confirmed by the latest survey by the Directorate of Economic and Market Research at the Ministry of Economy, Industry and Commerce (MEIC).
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.
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.
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%).