Interests would go up: what is the usury rate and why should you care

Starting in September and until the end of the year, purchases with credit cards, the moratorium on default and other new loans in the financial market could have increases in interest due to the increase of up to 35.25% in the usury rate.

(Credit card purchases will be more expensive in September: why).

The Financial Superintendence set this figure as of September 1, the highest recorded since 2001, and which would greatly affect purchases made with a credit card.

This decision is made as a complement to the increases in the rates of the Banco de la República to control inflation.

Technically, according to the definition of the Banco de la República, “the usury rate is the maximum remunerative or moratorium interest that an organization can charge to the agents of the economy and is constructed as 1.5 times the current bank interest per type of credit”.

That is, the limit that a bank or financial entity can charge for consumer and ordinary credit, which continues to increase, so entities are expected to raise interest rates on financial products, such as credit cards.

(Increase in usury rate accelerates).

The remunerative interest is the return agreed for a capital loan during a certain period, and the moratorium is the corresponding compensation for delay according to the agreed term.

The person in charge of setting the usury rate is the Financial Superintendence of Colombia, which calculates and certifies by resolution the current bank interest rate for both consumer and ordinary types of credit.

It also does so for microcredits, and low-value consumption with the financial and accounting information provided by the credit establishments, and its calculation is carried out monthly, quarterly and annually, respectively.

(Banks propose to create a commission to eliminate the usury rate in the country).

How the usury rate directly impacts people’s credit. This rise could directly affect your personal finances, which is why experts recommend, for example, use credit cards as an investment tool and not as an expense, that is, make purchases that will give a profit in the short or medium term, and not only that represent an interest payment.

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