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El Salvador Moves Forward with Credit Card Interest Rate Regulation

Article Summary:

Proposals are being put forward in the Legislative Assembly of El Salvador to limit interest rates on credit cards via a usury law. Specific details of the proposal have not been disclosed, but apparently, it aims to impose a ceiling of 36% on interest rates, according to statements by some parliamentarians.

Original Article Text From El Salvador via Google Translate :

Usury Act Include Credit Cards
Several deputies are in favor of a law governing usury, plus interest credit cards, those charged by other financial products, however, the National Association of Private Enterprise (ANEP) noted that the interests of plastic money must be a function of competition.

Recently, Rep. Francisco Zablah, the party wins, and the FMLN dusted Law Credit Card System, proposing to amend Article 19 to lower interest rates, according to them, remain very high for users.

Enrique Valdes, ARENA deputy and president of the finance committee of the Legislature, said he still does not know in detail the proposal Zablah driven and the FMLN, but stated that this time the ceiling of 36% is “acceptable limit” .

He added that “the idea is to let it cross a law, valid for all credit products and not just one”, so opted for the adoption of a law against usury.

“What sense does that solve the issue of cards if you can still be more abuse in all other products,” stressed the legislator sandbox.

Similarly, Douglas Aviles, Democratic Change, said this issue should be legislated in a usury law, which incidentally is already working on the finance committee.

“No doubt the current rates should be lowered, but must be included in the context of a law against usury, which is reviewing the financial committee for months and is almost ready,” he said.

The National Coalition deputy Elizardo Lovo, meanwhile, said that “not a good message to tell how much private investment is entitled to win because that would also tell you how much is what the state could return if he loses.”

Lovo said that a law of this nature can not be approved in a hurry, much less for electoral reasons, as claimed and the FMLN wins.

The reaction of the Salvadoran Banking Association (Abansa) was swift and reiterated that if successful the initiative, about 300 thousand cardholders have lost the benefit of consumer credit for 30 days, without interest.

Likewise, the president of ANEP, Jorge Jose Daboub, was concerned that some political parties are trying to pass laws in order to win populist votes in the upcoming elections.

“That’s dangerous … and that’s what we are seeing steadily each day, instead of seeing how we consolidate this country seriously, with stability, predictability, we are hearing ganguerías, populism, that people may sound nice , you can applaud, even to thinking they can vote, deceived, this is good, not realizing that they are taking a medicine that is going to be more costly than the disease “he said.

Competition in the market is going to make the cards fall just interest rates. There is no way he explained.

Daboub joked with the example that if the deputies imposed by law that a pound of tomatoes worth five cents, would be great for people, but what would happen is that farmers who grow and sow not, because the costs would be higher and could not sell at that price, the union leader concluded.

Link to Original Article:

From El Salvador

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