Sunday 24 October 2021

Costa Rica Credit Card Debt Doubles

The balance of credit card debt in Costa Rica doubled in the last eight years, going from US$1 billion in April 2010 to just over US$2 billion in the same month in 2018.

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The balance of credit card debt doubled in the last eight years, going from US$1.005 billion in April 2010 to US$2.095 billion in April 2018, the Ministry of Economy, Industry and Commerce (MEIC) has revealed, by means of a report prepared by the Directorate of Economic and Market Research.

For their part, defaults of less than 90 days also showed an upward trend. Since January 2016 and up to April of this year, the default balance has doubled. Both indicators show that the amount of defaulted debt is growing, which is critical because card issues are growing exponentially (approximately 3% or 65,000 cards per quarter), especially in products with higher interest rates, adds the official statement issued by the MEIC.

Regarding the trends reported, Erick Jara, director of Economic and Market Research, explained that “… Quarterly card studies have shown sustained growth in terms of card issues, and 70% of card types have an interest rate that ranges between 40% and 50%. In addition to the above, the balance of defaults of greater than 90 days has doubled in the last four years, therefore, this situation is a reflection of a supply channel which in general terms, is issuing cards without analyzing customers properly and on the other hand, users are accepting plastic cards without contemplating the effect of getting into debt with a very high financial cost. Therefore, the level of risk that the issuing entities are assuming, due to the scarcity of discrimination in terms of issue of cards, is reflected in the high interest rates.”

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