Legislator Wants Cap On
Credit Card Interest
Rate
If legislator, Óscar
López, of the Partido
Accesibilidad Sin
Exclusión (PASE), has
his way, banks will have
to place a limit on the
interest they can charge
on their credit card
products.
The legislator says he
wants to help the 1.2
million Costa Ricans who
are holders of credit
cards, of which 300.000
have gotten over their
head, losing their cards
and possibly losing
their home and other
goods.
According to López it is
imperative that the
country's legislators
approve a law that
regulates credit card
interest rates and
conditions offered to
consumers by the
financial institutions.
The PASE legislator
wants a cap of a 26%
annual interest rate.
Currently there are
hundreds of different
credit cards offered by
the state and private
banks and financial
institutions that can
come with annual
interest rate of over
50%.
López called the high
interest charge of the
banks as "usury" and
believes that there is a
need for a law to
protect consumers and
stop the tendency by the
financial institutions.
Another item on López's
agenda is stop the banks
from charging interest
on interest, all legal,
as banks continue to add
up their customers debt.
López is proposing that
to stop the abuse,
financial institutions
use a simple interest
calculation and that
late interest penalties
be applied only to the
original principal
balance and not the
accumulate principal and
interest per period.
According to the
Ministerio de Economía,
Industria y Comercio (MEIC)
at the end of 2007 there
348 credit card products
in Costa Rica.
A check of the websites
of the state and larger
private bank websites,
only the Banco de Costa
Rica (BCR), publishes
interest rates on its
credit card products.
The BCR, for
instance, offers an
annual interest rate of
21% on its Gold and
Platimum cards and 25%
of its "local" and 23%
on its "international"
visa credit cards, the
Banco Nacional,
the largest of the
private banks,
Scotiabank, as
well as HSBC and BAC San
Jose, all publish the
different products
offered, but not the
interest rate.
|
