Figures provided by Colombia’s Financial Supervisory Authority show that between 2 October 2015 and 6 March 2016, credit card interest rates rose 84 base points.
This means that on average, an interest rate of 27.9% is charged by most banks in Colombia when people use their credit cards. Just over 20 banks offer credit cards in the country and only two of these institutions – Falabella and Davivienda – have actually lowered their rates. The remainder of the banks, including Banco de Occidente, Citibank and Corpbanca, have all increased their rates.
Economic observers say that the rises were not unexpected, especially as the central bank has been steadily increasing benchmark interest rates. Since last September, the benchmark rate has increased by 200 base points.
The bank’s strategy is to use interest rate rises to attack the problems of rising inflation. The idea is to slow down the flow of credit, causing lower economic growth and as a result, bring down inflation.
The downside of this policy, is that credit is now more expensive for Colombians.
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