La Jornada Maya - Card interest at risk of returning to 2011 levels: Analysts

Credit card interest rates may reach levels not seen since 2011 and as high as 37 percent if the Bank of Mexico (BdeM) continues its policy of raising the financing rate as a measure to contain inflation, assures professionals who have been consulted in this way.

People with a card that is not “full”, i.e. those who do not pay their total overdue balances, will be the ones to suffer the most from the effects of higher interest rates by the central bank, and although the effect will not be immediately noticeable, yes it will be at the end of the year.

Last Wednesday, the Federal Reserve of the United States (the Federal Reserve, for short in English), increased its funding rate by 75 basis points, the largest increase since November 1994. Given such a measure, analysts expect BdeM Bank next week to make an increase to The reference rate is the same size.

“Currently, the average credit card interest rate is in the 34 percent range, but if the central bank makes the decision to constantly increase the rate, it can increase card rates to 37 percent, the highest level since 2011,” said James Salazar, deputy director of analysis at CIBanco. .

For his part, Ignacio Martinez, coordinator of UNAM’s Analysis Lab in Commerce, Economics and Business (Lacen) explained that although it depends on each institution to what extent it will increase the interest rate on the credit card segment, customers who pay monthly installments on Precisely so that they do not generate a benefit they will be most affected.

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“Total customers have no problem, because they use the card as a means of payment or even for benefits, but only those who pay the balances will be affected so that they do not generate interest or the minimum payment,” he explained.

If a person has a card with an average rate of 34 percent, the current monthly payment of 100 pesos with said interest is 134 pesos; However, higher prices can result in cardholders not having the resources to pay their debts and falling into minimal payments, Martinez explains.

“Inflation is at high levels and people are prioritizing basic needs rather than debt, but you have to think about those who already have their cards, and they can fall into non-payment situations,” he added.

Editing: Emilio Gomez


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