Interest rates on credit cards reach 82%, their highest level in 13 years

Since August 2021, the Central Reserve Bank of Peru (BCRP) -for 18 consecutive months- has been progressively raising its reference interest rate, going from 0.25% to 7.75% last January.

Although this action by the BCRP is in line with the adjustments of the monetary policy position and seeks to deal with inflation, this increase has already been reflected for several months in the interest rates of loans to companies, credit cards and mortgage loans.

Evolution of rates

And it is that, after having reached their minimums, the interest rates of all the credits in the banks have risen and many already exceed the historical average since September 2010, according to the latest study note of the BCRP.

Thus, the average annual interest rate of credit cards it went from 49.75% in August 2021 to 59.05% as of February 2 of this year, that is, it rose by almost 10 percentage points since the BCRP raised the reference rate.

Along these lines, Banco Falabella has an average annual interest rate of 82.70%, the highest in the market (see infographic).

A similar increase can be seen in consumer loan rates, which after standing at 39.94% are now at 49.30%, according to information from the Superintendency of Banking, Insurance and AFP (SBS).

Arturo García, professor of Finance at ESAN Graduate School of Business, indicates that these loans are the ones that have risen the most because there is a greater risk of non-payment, due to high inflation and greater informality.

“In the case of consumer credit, let’s remember that 78% of the economically active population is informal, so the risk of lending to that segment is much higher,” the professor pointed out.

In addition, interest rates on mortgage loans have risen sharply, going from 5.93% to 10% per year on averagean increase of 4.1 percentage points.

According to Jorge Carrillo Acosta, a professor at Pacífico Business School, this is the type of credit that has risen the most in percentage terms, since the increase exceeds almost 70%.

“The rate of mortgage credit it is exceeding 9.9% per year on average in banks, and a year and a half ago it was less than 6%, we are talking about a growth of more than 50% in the rate”, affirms the finance expert.

Rates would continue to rise

Both experts consulted by this means maintain that interest rates would continue with this upward trend, due to the fact that the BCRP is expected to continue raising its reference rate and also because of the social protests, which would push up the financial cost and make banks more cautious when granting loans.

“The social upheaval could increase the risk, there are some regions that will not be able to pay their credits. In a mortgage the rate can go up 1 point and in consumption about 5 percentage points, which will depend on the statistics of the arrears,” concludes the teacher. from Pacific Business School.

Interest rates for savers also rise

Another effect that has been observed has been the increase in passive rates, that is, the interest that banks pay to their clients for savings.

In detail, the product that rose the most was the interest rate paid by banks for fixed-term deposits in soles over 1 year, which went from 1.80% in August 2021 to 7.69% on 27 January of this year.

In this regard, Arturo García, professor at ESAN Graduate School of Business, indicates that profitability could continue to rise in the following months. It also explains that this increase is consolidated when the bonus is deposited in July and December.

The word

Arturo García, professor at ESAN Graduate School of Business

“The interest rates for the retail portfolio, which is for micro and small businesses, as well as for consumer and mortgage credit, are the rates that have risen the most due to the greater risk.”