If you have a credit card, it is best to keep it locked up and not use it, at least for the next few months. Why? Interests are through the roof and borrowing money could be much more expensive than it was in 2022.
Since inflation has been rising month by month for almost two years –closed 2022 at 13.12 percent-, the Bank of the Republic has also been increasing its interest rates and between September 2021 and December 2022 they went from 1.75 to 12 percent.
(Also read: CDT: What is it and how good is it as a savings option right now?)
This increase has been transferred at a higher rate to the usury rate, which is the maximum percentage that can be charged in Colombia for a loan, and whoever exceeds that limit incurs the crime of usury.
For January, the Financial Superintendency certified in 43.26 percent effective per year for the modality of consumer and ordinary credit, the highest in the last 23 years. Here are credit cards included.
Indeed, while usury has risen 17.64 percentage points, the issuer’s market intervention rate has done so by 10.25 percentage points since October of last year.
«It is very expensive to go to take credits at the moment. Colombians who are getting into debt are going to pay more interest rates on their mortgage, consumer, vehicle and credit card lines of credit, because interest rates move in the same direction, both for people who can obtain returns as for those who go out to take out loans”, explained the director of Economic Studies of Grupo Alianza, David Cubides.
We see that the usury rate exceeds 40 percent and the signals from the Banco de la República suggest that we be a little more prudent with spending decisions
These increases in market interest rates have been made for a single purpose: discourage consumption by families and slow down the growth that household indebtedness brings, especially through consumer loans.
For this reason, Scotiabank Colpatria economist Jackeline Piraján also recommends that Colombians prefer savings instruments or interest-bearing deposits (CDT), instead of acquiring new debts. «We see that the usury rate exceeds 40 percent and the signals from the Bank of the Republic suggest that we be a little more prudent with spending decisions,» added the expert.
(Also read: How to save money with record inflation and the new rises of 2023?)
If the current financial situation of a person does not allow avoiding the use of a credit card, the best thing to do is use it with rates and terms that adapt to the need. For example, not paying the market for a month in six installments.
If you have loans, especially credit card or debts with other people, it is best to pay them before starting to save or invest, Bancolombia advises.
is also key suspenders purchases necessary or that are done on impulse. And be very careful with the ant expense, the one that is low but occurs very frequently and that when added together does have a significant impact on monthly consumption.
