Living with credit

‘¡Carguelo a mi cuenta!’ campaign redux

Julie Sherrier


The predicted breakup of the love affair between Mexican credit card holders and their issuing banks isn’t happening as quickly as I thought.

It’s been reported that the delinquency rate among the country’s cardholders is reaching a nine-year high of 12.6 percent. That’s more than double the amount of U.S. credit card delinquencies, which hit 4.3 percent in June 2009. The record high for bad credit card debt in Mexico was 12.7 percent in 1999.

“The overall line of credit used by Mexican cardholders increased from 39 percent in December 2007 to 49 percent a year later,” said Pascual O’Doherty, chief analyst for the central Bank of Mexico.

And despite the huge increase in usage and delinquencies, the banks are still pushing credit cards to its citizens.

Call it eternal optimism or foolishness, but you can still get easy credit in Mexico — even if you only bring home $240 a month (so claims the only Mexican-owned bank Banorte, which promises “the easiest life for all Mexicans”). And it’s not like Mexico hasn’t been hit by recession.

Mexican citizens are being urged to revive their economy by spending — be it through credit cards or other means. And the banks appear to be confident that, despite the increase in delinquencies, that these losses are just a financial blip that can be easily absorbed by more profitable ventures. (Grupo Financiero Banorte reported around $240 million in profits from January to June 2009.)

As I reported earlier this year, interest rates on credit cards in Mexico can run anywhere from 42 percent to as high as 75 percent. And get this: ATM fees can cost up to $10 each transaction.

Not everyone wants this relationship to last. A consumer campaign is projected to launch this fall by activists protesting the high cost of credit and the increase in personal debt.  From what I can determine, offering low-income citizens credit at astronomical interest rates doesn’t sound like a match made in heaven.

See related: In Mexico, credit card defaults rise, Credit cards around the world: Mexico

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