Thursday 29 September 2022

Usury Bill Hits A Roadblock

The future of interest rate reduction bill will be known in a month

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29 September 2022 - At The Banks - BCCR

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The future of the bill that would lower interest rates for loans and cards, eliminating the current high-interest rates, will be known in a month.

Ten signatures are required to request a Constitutional consult. In the photo, Otto Roberto Vargas and María Inés Solís are two of the legislators making the written request

The bill, known as the ‘usury law’, that was approved in first reading on Monday, April 27, in the legislative assembly, is now in the hands of the magistrates of the Constitutional Court, to make a decision on the legality of the project.

On Thursday, the Court reported that the legislators opposed to the bill, managed to obtain the ten signatures required to opt for a “Constitutional Consult”.

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The legislator’s concern, with the support of Óscar Cascante of the PUSC, is that a lower rate would exclude lower-income Costa Ricans to credit options.

Today, Costa Ricans accumulate more than ¢1.4 trillion colones in credit card debt with interest rates on average above 45%, according to the Ministry of Economy.

The bill would limit the interest rates on credit cards and loans in colones to 39% on debt over ¢675,000 colones. In the case of debt in dollars, the maximum rate would be 31.35%.

For loans below ¢675,000 colones the top rate would be 55% and 45.66% for dollar loans.

Rates that exceed the limits will be considered usury, which could land the lender for up to two years in prison on business loans and doubled when the usury is to the detriment of consumers.

The final rate will depend on what the magistrates decide.

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