Published Tuesday, July 7, 2020

Bac San José-Credomatic announces
card cancellations, layoffs and
branch closings

By the A.M. Costa Rica staff

The Bac San José-Credomatic bank announced that it will close 187,526 credit cards for 79,789 current customers, lay off 373 employees and close at least 11 offices in Costa Rica.

According to the bank, these closings are due to the recently approved law against usury, also known as law against loan-sharking.

"We are forced to make these decisions with responsibility and respect for the law," said Federico Odio, manager of BAC Credomatic Costa Rica. "Unfortunately, there are a lot of people who will be affected and who we will not be able to continue serving following our previous (business) model."

According to the bank, the immediate enforcement of the new law that caps interest rates for financial, commercial and microcredit operations, has forced them "to abolish 187,526 credit cards for 79,789 clients, whose operations become deficient for the company."

These new measures will be informed to customers directly "in a 60-day transition stage to finalize the closure of their cards," bank representatives said

Card cancellations will take place no later than September. "The balances that are pending will enter a collection process, for which they will have up to 5 years to pay off," said the bank.

Specialists recommended that people who have savings or credit cards with the bank, check how these measures would apply in their specific case by calling 506 2295 9898.

On June, the Usury Law No.9859, also called loan sharking law against expensive interests, was published in the government newspaper, La Gaceta.

The new law establishes a methodology to be used in setting the maximum interest rate applied in credit cards and loans.

"This law manages to put a limit on high rates," said President Carlos Alvarado during the signature of the new law.

The law establishes the methodology that the Central Bank of Costa Rica must use to set the maximum interest rate, twice a year: in July and January. The bank rate percentage will apply to all other banks and financial entities that issue credit cards and loans.

The new law will also set that charges for carrying out administrative procedures may not, under any circumstances, exceed the amount equivalent to 5% of the part of the principal payment. Nor can it ever be more than $12. This fine may only be applied from the fifth day of delay, and may not be applied more than once a month.

This law is not retroactive, so it will only apply to new loans and credit cards produced by banks after law publication in La Gaceta.

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