The cost of refinancing credit card balances goes up

The Central Bank of the Argentine Republic (BCRA) raised the interest rate that will be applied for the refinancing of unpaid balances on credit cards starting in November. However, the measure does not affect purchases made in installments with an already fixed rate, but rather total balances that have not been paid off at the time of closing (when the minimum payment or a partial payment is made). The rate to be applied on unpaid balances rises from 107% to 122% nominal per annum (APR). Consequently, the total financial cost (CFT) will be more than 300%. This percentage applies to amounts less than 200,000 pesos or equivalent to 200 dollars. The new rate will have an impact on the debt accumulated with the bank issuing the card, but does not modify the value of the installments that may have been taken, for example under the “Ahora 12” program or with a particular business. The key to ensuring that the new rate doesn’t impact consumers’ pocketbooks is paying the full sum. In other words, paying the minimum, requesting a cash advance or paying in installments outside the Ahora 12 program will have a stronger impact on the pocketbook. For this last payment plan, the logic of short-term financing is extended, since Ahora 3 continues to be the most chosen option. For consumptions that exceed the threshold of $200,000 or USD 200, the rate applied adheres to the regulation by Credit Card Law. The interest charged may not exceed 25% of the rate that financial institutions apply to personal loans. 

Original source in Spanish

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