Ending the Consumer Credit Drought
For years, personal credit in Mexico and Brazil was outrageously expensive and near impossible to obtain. Declining interest and inflation rates are changing that. Non-banks are lending where traditional banks fear to tread.
Serfín, the Mexican bank, made a much-noticed splash in the credit card market at the end of last year. In September, with a multimillion advertising blitz, the bank launched Serfín Light, a credit card with an annual interest rate of "just" 22%. By Mexican standards, this a small price to pay for credit and one that other banks which charge around 37% a year, have yet to match. Within six months of introducing its cut-rate card, Mexico's third-largest bank more than doubled its credit card portfolio to $358 million through balance transfers and signed up more than 500,000 new accounts. "Serfín Light is everywhere," says Fernando Chávez, a chauffeur who said he got the card because its rate is so much lower than its competitors. Although he hasn't actually used his card yet, Chávez says he sees it as a kind of financial safety net should he have an accident...
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