The increase in borrowing capacity does not mean that you have to spend without limits.
Jorge Paladines has two credit cards in two of the banks considered large in Ecuador. One had a quota of $3,000 and the other $2,000. In September and October 2021, financial institutions increased their quotas to $10,000 and $9,000, respectively.
“I did not ask for it and they did not consult me. They just sent me a text message saying that they increased the quota. I logged into mobile banking and confirmed the increase. I called to ask and they told me that because they had good handling with the card they did it”, he indicates.
Jorge’s salary is just over $1,200 a month and he affirms that if he uses all the quota of those cards he would not be able to pay those debts: “I am responsible with my level of indebtedness, but I do think that it is a temptation that they put increase quota; in my case, up to five times more. I can safely assume that I can give myself certain luxuries because the quota gives me “.
A quota increase is defined by evaluating the customer’s ability and payment behavior. By maintaining the same level of income, a client can improve their ability to pay by adjusting expenses or other financial charges. That is to say, If a client maintains his income, but adjusts the other variables that improve his ability to pay, he may be subject to an increase in quota, as was the case of Jorge.
According to Produbanco, increasing or reducing the credit card limit will always be the power of the financial institution. “It is the entity that assumes the credit risk, so this decision is exclusively its own.” Quota evaluations are made at least six months apart.
What are the purchases in which it is recommended to use the credit card?
In the punctuality of the payment, according to the economist Héctor Delgado, the type must also be considered, that is, not paying only the “minimum”. In addition, user behavior with cards from other institutions is also evaluated: “If you have card A and pay well, but card B does not, that also has an influence. But if he pays well for all of them, it means that he is a person with a good financial culture and the institution will assume the risk of raising the quota.”.
Are there specific months where a bank increases the quota of credit cards?
Although banks continuously monitor the financial behavior of each client, there are certain seasons when an increase in the quota is analyzed, says Christian Jaramillo, manager of Credit and Debit Cards at Produbanco.
“In seasons such as back to school, Father’s or Mother’s Day, Black Friday, Christmas, we do increase quotas through well-segmented variables”, he indicates.
Even, considers Delgado, there are institutions that plan since the beginning of the year to increase the quotas of their clients: “There are banks that within their strategy begin to raise the amounts in consumer loans in certain years and begin to review the credit histories of their users”.
Can the client request that the quota granted be reduced?
Yes. An application is required and the bank will proceed with the reduction. In addition, the financial institution can also reduce this value directly due to the user’s bad credit behavior and must notify it in the account statement.
Meanwhile, to request a quota increase, it is important for the client to take care of their payment behavior (credit bureau) and to maintain proper management of their income and expenses in order to be a candidate for an increase. Another issue that influences, according to Diners Club Ecuador, are the conditions of the financial market.
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In addition, there are institutions such as Banco Guayaquil that, in order to authorize an increase in quota, the card must be at least one year old. If the user is a dependent worker, they will be asked for payment roles and if they are independent, the last tax return.
As of March 2021, 3,410,312 credit cards were registered in Ecuador, according to figures from Asobanca. This reflects a decrease, since as of March 2020 this figure amounted to 3,517,681. Although the maximum and minimum average quotas grew 1.7% and 1.4%, respectively, as of February 2021, compared to the same period in 2020.
The financial entities that have the most issued credit cards are Banco del Pacífico, Diners Club, Banco Pichincha, Banco Guayaquil, Banco Bolivariano, Banco del Austro and Produbanco, in that order. Visa is the most widely granted.
The increase in borrowing capacity does not mean that you have to spend without limits
For the financial consultant Paola Aulestia, although an increase in the quota of the card must be viewed positively, it also entails a high degree of responsibility, since if there is no financial education, the person can spend more and end up very indebted.
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Set limits and use the card for emergencies or heavy expenses, advises the specialist. “The family budget should not be left aside so that we do not go crazy when they increase the quota.”
Delgado agrees with this, adding that it is important for people to have knowledge of how to manage a debt.
“It is important that people always read the account statements and not only see how much the minimum payment is and only cancel that. In addition, by analyzing this document it is possible to detect if it has been consumed in excess and observe debits that are made automatically that, perhaps, are not necessary”, he says. (I)
Paul is a talented author and journalist with a passion for entertainment and general news. He currently works as a writer at the 247 News Agency, where he has established herself as a respected voice in the industry.
