Credit card use fell this year

Customers of the financial system prefer to use debit cards or cash to control their finances in the face of the uncertainty generated by the pandemic.

Between January and August 2020, the number of credit card transactions fell by 27% compared to the same period in 2019.

The Association of Private Banks (Asobanca) reported that even the billing was reduced by 26%.

The main factors behind this reduction are the lack of employment, the reduction in salaries and the unrest caused by the pandemic.

Julio José Prado, president of Asobanca, commented that there is uncertainty due to the crisis, so people prioritize saving over investment or spending, as well as using debit or cash cards to have more control over their finances.

It is estimated that the trend of credit contraction will continue as long as there is no vaccine for the coronavirus.

Enrique Burgos lost his job in a restaurant in Guayaquil in June and since then he has avoided using his two credit cards as he does not want the amount of USD 2.000 he owes to continue to grow.

According to Asobanca, another symptom that Ecuadorians are being more cautious with cards is that the issuance of new documents has decreased.

Between January and August 2019, 290.000 more cards were registered than in the same period in 2018. Meanwhile, in 2020 only 53.000 new cards were issued during that period.

During the most critical months of the pandemic, cardholders chose to defer their fees more compared to 2019.

Term purchases with this means of payment grew by 11%. On the other hand, the current payment – when the client decides to pay for his purchase at the end of the period indicated in the monthly statement of account – fell by 40%.

An analysis by Asobanca also found that spending habits were changed.

If the number of transactions until August of this year is reviewed, the majority correspond to purchases in supermarkets, followed by health expenditures, when a year ago most of the transactions were in restaurants and supermarkets.

Data from the Superintendency of Banks indicate that card payments in restaurants fell by 66% during the first eight months of this year, compared to the same months of 2019.

The reduction in mobility also led to fewer gasoline card purchases, which fell 43%.

Also, due to the lockdown, there were fewer purchases of clothing and footwear, which fell to 60%. This type of consumption generally went to current payment.

For the economic analyst David Castellanos, in the cases in which credit cards have continued to be used, what is observed is that they have sought to defer the debt for a longer time, in order that the installments are lower, even if interest is added.

He estimated that in December some commercial establishments offer deferral plans with a longer term and grace month to promote the purchase and not keep the merchandise.

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