Credit card debt challenges many in Colombia

Global Business

Colombia’s economy grew at its slowest pace in seven years in 2016, but that didn’t stop Colombians from spending more with credit cards.

CGTN’s Michelle Begue reports.

Credit card debt challenges many in Colombia

Credit card debt challenges many in Colombia

Colombia’s economy grew at its slowest pace in seven years in 2016, but that didn’t stop Colombians from spending more with credit cards.
Download Video

Studies have shown that new credit card users can be like kids in a candy store. It can take time for them to realize that a credit isn’t a license to spend.

According to the nation’s banking regulators, in 2016 credit card usage went up more than $3.3 billion to a record $21 billion in Colombia.

One economist said this is just a good sign-that Colombia’s informal economy is becoming more formal. Cash transactions have always been much more popular here, because more than 50 percent of the population doesn’t make enough money to pay bank charges.

“If people have any relation with the bank system, it is just in the level of a savings account and just so their employer can transfer their paycheck, and they don’t use anything else. So the great challenge for banks is to have Colombians take on more and more credit cards and have them use them,” economist Ricardo Bonilla said.

The challenge for consumers is getting in the habit of paying their credit card debt on time. The Colombian agency that supervises banks also pointed out that the number of past-due accounts grew by 20 percent last year.