The rise in rates that the Central Bank faced to discourage foreign currency purchases and try to sustain the demand for pesos in the midst of monthly inflation data above 7% reached the cost that is paid for finance with card. Visa and Mastercard informed their clients that since this week the cost of financing with credit plans has increased. between 2 and 24 installments outside the Now 12 program. The rise led to a plan of 12 installments of a bank card now jumped to 320% of total financial cost.
Last month the Central Bank raised the reference rate to 75% annual nominal, an effective rate of the order of 107% annual. The total financial costs of financing with plastics will thus rise to 245% per year for bank installment plans and 320% for plastics from non-financial entities. now 12 it went from a rate of 59.08% to another of 63.75 percent.
Payment in installments is the favorite way for Argentine consumers to finance their purchases. The financing of unpaid balances or “revolving” -which is the minimum payment or the cancellation of any amount less than the total- and the personal loan are behind the possibility of “kicking” the payments and waiting for inflation to liquidate its value.
The annual nominal rate that is charged for all terms went this month to 108%, from the previous 102%
But not all installment payment programs They are equal. Now 12, at a subsidized rate, is the most popular program with financing costs systematically below the market. Afterwards, the Credit cards offer their own plans for banks and, finally, the non-bank cards They are the ones that charge the most expensive rates.
It is the latter, the banking and non-banking programs, that saw the rates they charge for payments in installments skyrocket.
The annual nominal rate that is charged for all terms passed this month to 108%, from 102% previously. It seems like a minor change, but according to the term it has very different consequences. If all the concepts that are paid together with the rate, such as taxes and administrative costs, are added, the total financial cost (CFT) to be financed in three installments it went from 189.63% to 207.73% per year.
In the case of six installments, the CFT went from 193.81% to 212.59% annually. For payments in 12 installments, meanwhile, it jumped from 211.53% to 247.16% per year and, finally, paying in 24 installments will have a total financial cost of 274.85% per year compared to 231.36% that ruled until now.
Costs are even higher for non-bank cards: the total financial cost reaches 320.22% for the plan in 12 installments.
The rate increases do not only affect bank installment plans. Now 12 also suffered an increase this month, an increase in its financial cost, as a result of the increase in the reference rate. The last modification to the official program tied the rate to the variations of the reference rate and, with the strong rises that the Central Bank gave it, the cost of the plan is being adjusted upwards.
The annual nominal rate that applies to Now 12 went to 63.75% in October from the previous 59.08%. Translated into the plans, this implies that by paying in 3 installments, consumers will pay a direct rate of 7.58% compared to the previous 7.06%.
This is how the costs of Now 12 remain, as explained by the program’s own site:
📌 3 installments: 10.10% If you make a purchase for $1000 you will pay 3 installments of $366.99 TNA: 63.75%
📌 6 installments: 20.78% If you make a purchase for $1,000 you will pay 6 installments of $201.30 TNA: 63.75%
📌12 installments: 45.06% If you make a purchase for $1000 you will pay 12 installments of $120.88 TNA: 63.75%
📌18 installments: 73.79% If you make a purchase for $1,000 you will pay 18 installments of $96.55 TNA: 63.75%
📌 24 installments: 107.78% If you make a purchase for $1,000 you will pay 24 installments of $86.58 TNA: 63.75%
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