What is the CAT and how is it calculated?
The CAT is a measure that the Bank of Mexico standardizes on the cost of money that institutions lend.
It is expressed in annual percentage terms and incorporates all the costs and expenses inherent to the credits such as the opening commission, investigation expenses or insurance (such as life or unemployment), depending on the type of credit being acquired.
The Total Annual Cost or CAT began to be applied in Mexico in mid-2007 for credit cards and mortgage loans, and in mid-2010 the Bank of Mexico expanded its application to all consumer loans: personal, payroll, durable goods and for automobiles.
One of the main recommendations before taking a loan is to know the CAT since it allows people to select the financial institution that offers the best conditions, that is, one that suits their payment capacity or the terms (weekly, biweekly or monthly).
What are the changes proposed by Banxico?
One of the most relevant changes is that crowdfunding or collective financing must present their CAT to the public, in addition, companies that request a guarantee loan must include this cost in the CAT.
When a person requests a car loan, the CAT must include the commission for the opening cost, for example. In the case of companies crowdfundingthe cost of investigations carried out by some client platforms must be included to corroborate that the person is who they say they are and to verify that the information they gave to the platform is true.
Banxico requests that the calculation use the commissions registered with the Registry of Commissions in addition to the fact that banks will be forced to retain documentary evidence, and make the calculations of the minimum payment for at least three years.
Experts point out that with this modification a “deep reconfiguration” is expected in the way in which financial institutions design, evaluate and communicate their credit products.
Banxico will now be able to ask financial institutions for all the necessary information to verify proper compliance with this measure.
The Association of Banks of Mexico (ABM) has told the media that for the moment no comments will be issued on adjustments to this new regulation that Banxico is seeking.
Banxico will receive comments from the general public on this project until December 22, 2025.
How can I check the CAT of my credit card?
To consult the CAT of credit cards, Banxico has one page in which users can compare classic cards to platinum cards.
The lowest fee for credit cards starts at 23%, while the most expensive cards can have a CAT above 100%.
