After President Gustavo Petro urged the financial system to make an effort to lower interest rates for its clients on March 3, Bancolombia announced that it will reduce rates by 50% on its credit cards.
Like a domino effect, the decision taken by Bancolombia was replicated by other financial institutions in the country, which, wanting not to be left behind and lose customers, chose to lower their interest rates for their products.
(Bancolombia lowers interest to about 50% of credit cards).
To date, in addition to Bancolombia, the other banking entities that did the same were Banco de Bogotá, Banco de Occidente, Davivienda, BBVA, Banco Agrario de Colombia, Scotiabank Colpatria, Banco Pichincha and the Territorial Development Bank (Findeter).
These banks announced during the week the decrease in their interest rates, which, together, range between 20 and 57%.
In the same way, these adjustments will be reflected in various products offered by these entities: while the banks of the Endorsement Group that took these measures did so for specific offers and cards, others, like Banco Pichincha, did it for their entire portfolio.
(Banco de Bogotá and Banco de Occidente also lower interest rates).
This will apply to purchases made after March 10 with credit cards Classic Visa, Classic Mastercard, American Express Blue, Young Mastercard and Mastercard Ideal. Customers with any of these cards will have an effective annual interest rate of 25%, which is below the current maximum rate of 46% effective annual.
Bancolombia explained that the benefit applies to clients with a quota of up to 3.9 million pesos.
Despite President Petro’s call, Bancolombia’s decision goes against the Bank of the Republic, which has maintained its upward monetary policy, and with the increase in inflation in February, the Issuer would be under pressure to make a new rate hike.
(‘We are approaching the inflation ceiling, whatever it may be.’)
However, for Jeisson Balaguera, CEO of Values AAA, this decision, beyond contradicting the Central Bank, responds to a Bancolombia strategy to prevent customer flight, taking into account that the financial entity plans to leave a large portfolio of clients before the position of other banks to reduce the rates.
“There are several financial entities that are already offering lower rates than those offered by Bancolombia, a reason that led the entity to recalculate its strategy and reduce its rates as well,” Balaguera stated.
For his part, for Marc Hofstetter, professor of Economics at the Universidad de los Andes, although many experts have pointed out that Bancolombia’s decision goes against the policies of the Bank of the Republic, what really strikes him as striking is that a bank had a credit card rate of 46% effective per year.
(High inflation would be affecting the credibility of central banks).
“And beware that the rate that remained, of 25%, is still very high and does not invite people to spend,” notes Hofstetter.
The rise in rates has been slowing credit in Colombia and undermined consumer confidence, a situation that is leading to a rethinking of the strategy in the entities.
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