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Wednesday, December 07, 2022

What will be the cost of refinancing the card and “now 12” after the new increase in interest rates

What will be the cost of refinancing the card and "now 12" after the new increase in interest rates

The total financial cost will exceed 100% per annum in all cases. It’s an inevitable blow that falls on consumption

By Claudius Zlotnik

16/09/2022 – 11,000hs


the last rise of Rate of interest -decided by the central bank on Thursday – will have an impact on the cost of consumption. Financing with credit cards will become more expensive, as will “now in 12” installments, a strong increase from an already strong few weeks ago.

will also affect short and long term loans Intended for companies including lines intended for production.

Aim to have a positive real rate (above inflation) – some agree with monetary Fund– is being achieved, but there is no doubt that these measures will result in an inevitable cooling of economic activity.

It is also clear that, with new interest rates That, in today’s situation, bets on fixed-term yields, pesos, seem more attractive, to the detriment of investing in dollars.

To clear, from now on, the effective annual rate of fixed terms becomes 107.1%. This equates to a dollar count for September 2023 with a liquidity or MEP of approximately $600.

How much does it cost to spend with the card

After the new improvements, total financial cost This increased to 132% per annum (77% per annum nominal and 111% per annum cash) for deferred card payments.

New Rates: The Total Financial Cost In All Cases Will Exceed 100% Per Annum

New rates: The total financial cost in all cases will exceed 100% per annum

Now, it’s almost impossible to salary An increase of 132% per annum, to be equal to the cost charged by the cards, if only the minimum payment is made and the balance is kicked in.

The time of pandemic is far behind in which cost of refinancing consumption With the card it remained at 43% per annum (55% of CFT), with inflation of 36% for that year 2020.

Caught “now 12”

Very different from when it was created, more than a decade ago, “now 12” This means no longer buying at 0% interest.

Financial cost, after last update, already increased to 97.8% per annum, In line with inflation in the last 12 months. Also salary improvement. But it is no longer “free” logically.

This CFT is likely to be over 100% with yesterday’s update on Thursday. final resolution of trade secretariatIhey: “The new direct rates shall take effect from the fifth business day of the day the Central Bank of the Republic of Argentina revises the reference rate,” states resolution 5/2022, published in the Official Gazette.

It’s clear: it’s one thing to enable subsidies when annual inflation It is 20% or 25%, and when it jumps to 95%, it is quite different, as it is most likely to end this year. If not more.

Very Different From When It Was Created, More Than A Decade Ago,

Very different from what happened more than a decade ago, when it was created, “now 12” no longer means buying at 0% interest.

It is clear that the increase in these costs will affect the level of consumption in two ways. By loss of purchasing power of wagesWhich inevitably loses out against such increases in prices, and because even the quota is far from what an employee would pay.

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