Uncovering Mexico
Jeremy Schwartz is the Mexico correspondent for Cox Newspapers. He is based in Mexico City.What's on this page?
The entry titled "Mexican credit card rates: cover your eyes."
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Mexican credit card rates: cover your eyes
Heaven help Mexican credit card holders who don’t pay off their bills in time. Even as interest rates plummet in the United States, interest rates on Mexican credit cards are enough to make any American gasp: the average interest rate right now stands at 34.27 percent, according to this morning’s Reforma newspaper. Several popular banks offer credit cards with an interest of more than 40 percent. The American Express Blue Card has annual interest rate of 37 percent here, according to the Reforma survey. Since April, interest rates have skyrocketed on some cards, as much as 15 percentage points.
Mexican banks say that worry about a slowing economy (growth rates here were recently downgraded to just 2.8 percent for 2008), lower employment numbers (Mexico’s biggest bugaboo) and high rates of loan defaults have caused the interest rates to surge.
Making things worse, the Mexican government says some banks are activating credit cards for consumers who never asked for them. “Clients frequently become registered in the credit bureau with debt from credit cards they’ve never had in their hands,” the Mexican government’s financial services watchdog Condusef told Reuters recently. “They’ve never received an account statement, but when they revise their status in the credit bureau, it says they owe $20 or $40 for commissions on credit cards they never asked for.”
Consumer credit and credit cards are a booming business in Mexico, growing an estimated 20 percent in 2007. But interest rates have never been kind to Mexican consumers and the Condusef has blasted banks in Mexico for charging exorbitant rates and fees. Most of Mexico’s banks are owned by financial institutions in Europe, which charge much higher interest rates in Mexico than they do in their home countries.
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By Michael Wolf
February 6, 2008 4:48 PM | Link to this
Given conditions here (the postal service is terrible, it is extremely difficult to find accurate information about anything, high un- and underemployment, a pliable government, etc), none of this is very surprising.
Enforcing payments has got to be difficult.
As for slamming unsuspecting consumers, what’s the downside for the banks? At the worst, they just won’t collect that money. Since nobody likes banks anyway, and since factual information spreads so slowly, the PR fallout has got to be minimal at best.
By Ronnie
February 6, 2008 9:05 PM | Link to this
Having recently taught in Mexico for one year, I noticed the huge problem of credit cards in Mexico, and it scared me. There were booths for credit cards all over, for Wal-Mart, Sears, and other local stores. There were always lines that these booths. This is a definite cause for concern - thank you for your blog!
By Mike Jones
February 7, 2008 9:29 AM | Link to this
Why are mexicans so racist against blacks ? Don’t they know that whites want to ship them back to Mexico, and now the blacks see them as racist, they are not going to help them, they are going to let the evil that white people do, slap them right in their face
By Question
February 7, 2008 2:32 PM | Link to this
Do you know of a website where i could find consumber credit trends in Mexico for the last 10 years. Specifically non -performing loans?
By Larry
February 11, 2008 2:32 PM | Link to this
Mike Jones, put down that bong pipe. What the heck are you talking about?
By Steve Parsons
February 11, 2008 6:36 PM | Link to this
Sorry to say, but in many conversations with the Hispanic individuals, they view black people as lazy, and feel that society owes them. I always wondered why too, and this is the answer I got.
By Credit Reader
February 15, 2008 2:09 PM | Link to this
Wow. I don’t think you’ll ever see a line for people applying for credit cards in the US. Are there ads that tell people to go to these booths? In the US, generally, you’ll receive a piece of mail that tells you that you’ve been pre-approved for a credit card offer, but I get so many in my mailbox I usually just throw them away. Are there credit card mailings in Mexico?