During the Central Bank presentation announcing the new credit card ruling on Wednesday, the bank authorities enthusiastically forecast a significant reduction in credit card interest rates. However, Banking Superintendent Rafael Camilo was more cautious when interviewed yesterday, saying that the cost reductions for borrowers using their credit cards will be “slight, but not so significant.” The new ruling establishes that the banks would use the average cost of consumer credit borrowing as a reference for setting the credit card interest rates. At present, credit card borrowing is on average three times more expensive than consumer credit borrowing directly from the banks.
How the new resolution will affect credit card interest rate charges is yet to be seen. While Superintendent Camilo says the charges will go down “slightly,” on the other hand, in its print edition today, Friday 5 April, Listin Diario quotes him as saying that the interest rate on credit card purchases could be around 18%. Camilo himself confirmed that some financial institutions were charging excessively high rates of around 80% a year.
The spokesman for the shopping mall owners association (ONEC), Ernesto Martinez, praised the announcement of the ruling, saying that improvements in transparency and interest charge reductions would be positive for the economy in general and are very timely. As reported in Hoy, Martinez said that the expected reduction in interest rates, as a result of increased competition among banks, will make it possible for Dominican consumers to use their credit cards as a true credit instrument and not as a costly form of financing as happens today.
http://www.hoy.com.do/economia/2013/4/4/474369/ONEC-saluda-reglamento-sobre-tarjetas-de-credito
www.bancentral.gov.do/noticias/notasbc/bc2013-04-03.pdf