The real cost of borrowing money with credit cards in Costa Rica runs about 40 to 50 percent for the majority of cardholders. Despite the seemingly usurious interest rates, the use of credit cards in our country, which is besieged by rising inflation and looming unemployment, has grown about 7.3 percent since last year. According to a news report filed by Fabio Parreaguirre of business news daily La Republica, 72 percent of credit cards issued in Costa Rica have real interest rates higher than 40 percent, and quite a few boast a 50 percent cost of lending. To this effect,… The post Despite Exorbitant Interest Rates, Credit Cards Rule Costa Rica appeared first on Costa Rica Star News. Continue reading → The post Despite Exorbitant Interest Rates, Credit Cards Rule Costa Rica appeared first on Costa Rica Bookings.
The real cost of borrowing money with credit cards in Costa Rica runs about 40 to 50 percent for the majority of cardholders. Despite the seemingly usurious interest rates, the use of credit cards in our country, which is besieged by rising inflation and looming unemployment, has grown about 7.3 percent since last year.
According to a news report filed by Fabio Parreaguirre of business news daily La Republica, 72 percent of credit cards issued in Costa Rica have real interest rates higher than 40 percent, and quite a few boast a 50 percent cost of lending. To this effect, La Republica offers the following example:
If a consumer in Costa Rica purchases a flat-screen television with a credit card, he or she will likely choose to make minimum payments. If the purchase price of the television was 200,000 colones (less than $400 at the current exchange rate), it could take 60 minimum monthly payments to entirely pay it off on a credit card with a real interest rate of 48 percent, which means that the total price of that purchase would be 530,000 colones (about $1,000), which is a little more than 2.5 times what it would have cost had it been initially paid in full.
As of late January, there were nearly two million credit cards circulating in Costa Rica, which represents a 2.5 percent increase since October of 2014. What makes credit cards so exorbitant in our country is the steep cost of penalties and other fees beyond the annual percentage rate (APR) of financing. In some cases, penalties for late payments along with mysterious administrative fees can boost the interest rate to 65 percent. Credit card issuers have been criticized for their implementation of these fees, which many consumers feel that they are imposed in a complex, unfair and arbitrary manner.
Officials from the Ministry of Economy in Costa Rica are planning on increasing awareness about the reality of credit cards,. which collectively represent billions of dollars of consumer debt.
The post Despite Exorbitant Interest Rates, Credit Cards Rule Costa Rica appeared first on Costa Rica Star News.
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