- The Washington Times - Wednesday, October 23, 2002

BUENOS AIRES More than 12 million Argentines have had their credit cards restored after nearly a year without them at an interest rate that almost doubles the nominal price of what they buy.
The clamp on credit cards followed a bank freeze in December that caused widespread rioting and toppled the government. As the value of the currency went into a free fall, card payments became impossible.
Now, almost a year later, with the peso down to about a third of what it was worth in December, credit cards have come back into use.
But there also is bad news. For one thing, credit-card debt must be paid in no more than six installments.
The interest rate on credit-card purchases is about 75 percent, much higher than that paid on average by U.S. cardholders.
The difference in real terms is less than the interest rates imply: Inflation in Argentina is about 40 percent, compared with less than 2 percent in the United States. But a real rate of 35 percent is extremely high and wages have not kept up with it.
Despite the high rates, Argentines strapped for cash because of the banking freeze, which was lifted only partially, were using credit cards to maintain their spending power. This usage is likely to jump.
According to a recent report by the Ambito Financiero financial newspaper, credit-card sales of $6.5 million last month represented only 4 percent of total purchases.
However, credit-card sales this month are expected to jump to $18 million.
While these are still low figures for what was once the most affluent consumer society in Latin America, the anticipated increase is seen as a sign that the country's economic spiral has bottomed out.
Still, laments Nestor Yoan, chairman of the Argentine Credit Card Association: "We are still a long way away from our historic average [of] between 25 percent and 30 percent of total sales."

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