As if the economic situation in Argentina were not very complex, a new storm front is looming on the horizon: financing with credit cards had a fall of 12.5% last December, compared to the previous year, according to data from the Central Bank. In this way, the lack of financing for purchases, including operations in a single payment, come to complicate the panorama. It not only creates difficulties for consumers but also for businesses that suffer from reduced sales.
For its part, from the Federation of Commerce of the City of Buenos Aires (FECOBA), following the monthly survey that monitors various variables that affect consumption, they point out that businesses are seeing the impact of this sharp drop. In a context of high inflation rates that reduce purchasing power, it is even more difficult for small merchants to maintain sales levels.
Fabian Castillohead of the entity that brings together Buenos Aires merchants, pointed out that “in the last year, there was an increase in domestic debt. We Argentines often talk regarding the IMF and the external debt, but today the internal debt increases every day. In this context and a number of millions of credit cards, it makes people “play” with one, two or three cards.
Official alert for the lack of credit for consumption
The saturation of plastics is clearly seen on a daily basis in shops “one passes the customer’s card and says that there is no space, takes out another card, tries once more and so on. What does this mean? That different priority issues, such as rents, services and the primary food theme, they take practically the entire salary of the consumer. And leave for the last fortnight issues related to survival, such as buying clothes, shoes.
Causes of the collapse and its impact
“The figures from the latest report are really worrying and frightening, because people do not get to pay the total of the card. Many of the bank rates exceed 140% interest. This is a serious problem, which, added to the fact that banks in many cases also reduced credit on these plastics, causes the system of self-sustainability of credit to collapse”, warns Castillo.
From FECOBA, they point out that “the sword of Damocles is the inflation. There are no reference prices, today we do not know what is expensive or what is cheap. In the specific case of the credit card, people need to finance themselves because they cannot cover their consumption in cash and the card is loaded more, with a pocket that gets smaller and prevents completing the total payment of the card.
Regarding the direct impact for trade, Castillo said that obviously reflected in the lack of sales. “The last survey of FECOBA, showed that the impact with the drop in sales represents in units and on average, 23% per year. And always speaking of the formal activity. It is a very important number, because it is equal to less billing and utility. It is also less taxes that are paid, at times when comprehensive public health and education are needed, which creates an additional difficulty ”, he assures.
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The average 23% annual drop in units “It activates the alarm because the percentage has been adding month by month, which is why we have also been insisting that a higher denomination bill has to come out due to insecurity. The scourge that is with Credit cards non-credit loans that do not enter the system, and on the other hand, the lack of cash, is almost a perfect storm for the consumer and, obviously, for those who sell the products”, affirms the head of FECOBA.
Within this dynamic,The “Now 12 or 18” programs are not a problem, they are a necessity for SMEs. It is giving the possibility to the consumer, precisely, so that he can access the product that he needs. The big problem is inflation, what you have to try is to balance with a specific plan, it is the sword of Damocles for any system”. He also made reference to impact of the World Cup in Qatar 2022. “A World Cup was never held on that date and that led to other expenses that later influenced the credit card and the impossibility of consumption in that context. What does that mean? That people’s expenses are at the limit, that there are no savings. That people need to buy, but it is not enough, because the salary is shortened in advance “
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“We are prioritizing issues that have to do with daily life, that should not even be accounted for, that has to do with that electronic toll expense or with the food part. Today it is seen in the small neighborhood store, which people no longer buy in quantity, but what you need in the day. And he ends up paying with payment systems, or with the card”, says Castillo. “Before it did not happen, these things were paid in cash. Today people do not have cash and need to make payments in another way, ”he adds.
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“We need to know what is going to happen in February, March, April, and so on. That’s why we ask that there must be a plan, which intervenes in the economic, social, educational and formal aspects. We cannot let the economy continue to grow informally. You have to give the opportunity of access to entrepreneurs, to people who need to start their future.
Necessary that there are reference prices. As Lita de Lázzari said: “lady walk, when you walk you will be able to compare and know when it is cheap or expensive before buying”. Today there are no reference prices, it is not known at what price it will be replaced, or if the raw material will be lacking, and everything generates insecurity regarding the present and the future.
JL
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