Crisis Looming
For Credit Card Debt
Costa Ricans may soon have to worry further
as the world economic crisis that is
affecting Costa Rica will soon be
overshadowed by more local financial crisis,
the abuse of credit cards, which experts say
is not too far in the near future and affect
thousands of Ticos.
Economist Carlos Arguedas says that the
situation is a "bubble that can bust at any
time".
Arguedas says that Ticos have been using
plastic disproportionately, well over and
above their ability to pay, racking up an
estimated ˘571 billion colones of debt.
Currently there 401 credit card products
offers by the Costa Rican banks and
financial institutions.
Arguedas says that his predictions are
confirmed by the actions of the financial
institutions that have been busy readjusting
their credit card policies, becoming more
flexible, offering easier payments and
extending credit limits, allowing consumers
to fall deeper into debt.
Extending and easing repayment terms is
spurring Ticos to use their plastic even
more, says Arguedas.
The financial institutions, for the most
part, continue to be lax on the amount of
debt as long as customers pay the minimum
balance and charged interest that can be up
to 50% per year and higher at some
institutions.
In Costa Rica there are few rules governing
credit cards, a product that has been in the
country a relatively short time. Credit card
issuers are not bound by regulations like
those in the United States and other
countries and have no limit on the amount of
interest, additional fees and costs
associated with the credit card.
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