Mexico rebels at credit card rates, mulls limits [View All]

[Robbien]

Source: AP

MEXICO CITY (AP) — Millions of first-time credit card holders remade Mexico in recent years, buying everything from diapers to DVD players on credit and spurring a boom in consumer spending and bank profits.

Many now regret it: With interest rates, commissions and fees topping 100 percent a year, delinquencies have soared as the global economic crisis boosts unemployment and leads banks to raise rates even more.

. . .

Congressmen, grass roots activists, one of the world's richest men and even the Roman Catholic Church are now rebelling against the rates, some of the world's highest and equal to 10 times the top rate banks pay out on deposits.

"Banks are acting with irresponsible voracity, demanding extremely high interest rates which in the end, people won't be able to pay," the Catholic Archdiocese of Mexico said in December. Banks' "insatiable greed" is speeding an economic crisis that may spark social unrest, the Church warned.

So great is the anger that Mexico's conservative governing party has argued in favor of following in the footsteps of leftist Venezuela, which caps credit card interest rates at 33 percent.

Read more: http://www.google.com/hostednews/ap/article/ALeqM5h7Z25jSD76uw5BQPmE05TDB4Ey7gD9760DU82

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Main offenders: Citigroup and HSBC. Mexican banks had strict lending policies but Citi and HSBC came in and opened up booths in the malls giving cards to all and sundry.