Argentines using cards more than cash

[coolhunter]

I've read a few threads on this forum about Argentina not being affected by the debt crisis since people buy properties using 100% cash there's no such thing as a mortgage (which is untrue btw since I have a few argentine friends who have bought properties with mortgages).

However I've noticed that the majority of Argentines using credit cards to pay for items in restaurants, shops, supermarkets etc. I clearly remember arriving in 2008 and most argentines using cash instead of cards. There's also options to use a 'multiple payment' option to split payments over many months.

I would say if there's going to be a crisis here again it's going to due to that since people clearly can't afford the high inflation prices and need to use credit cards to pay for nearly anything they can. Plus a lot a companies/businesses here are not raising salaries which will make things worse.

If the peso does devalue and inflation increases further I think this is going to lead to havoc for most of the middle classes and worst for poorer people here.

 

[El Duderino]

It could just be a matter of convenience. I think most people find it easier to pay that way.

 

[Bv3]

Many people are banking on the inflation when they pay by credit card. If you can make 3, 6, or 12 monthly payments with no interest you save a lot because paying 100 pesos in 6 months is much less than paying 100 pesos today.

 

[Crema Americana]

Credit cards have been used for quite a while. I suppose it depends on the person's income and what kind of card they have, but when purchasing at Easy or even the supermarket, they often ask "how many payments?" I think a lot of people live on credit, just like the US. Also a credit card is a lot more convenient to carry around, and perhaps safer too especially when dealing with several hundreds or thousands of pesos. With all the robberies, it doesn't surprise me that more people choose to pay with credit.

As for the peso devaluing... people also spend because what you buy today, will be more expensive tomorrow. Why put your money in the bank if it's just going to lose value?

 

[jb5]

I'd accrue debt too if I were a local. What history has taught is that your money is worth less over time. You can keep your money in the bank making great interest but it can be gone tomorrow. Think about it, banks are paying 20% interest. That compares to .5% if you're lucky in the US or Europe. Why isn't the whole world saving here?

History, simply, has taught Argentines to spend like there's no tomorrow. Literally.

 

[garygrunson]

My bank gave me a credit card and I don't even have a job, so credit is easy to get here. I was just opening an savings account and they asked if I wanted an American Express. They never even made me prove that I had any income.

 

[coolhunter]

I totally agree it's more convenient to pay by credit/debit card than cash (especially with long queues at the atm here). However I find it alarming that it's so easy to get credit here and especially when people can't clearly pay and rely on their next pay cheque to cover the debt.

Like I said if companies can't sustain wages to satisfy the inflation rises employees can't re-pay their debts and most likely default on their re-payments which mean the banks get hit. Multiply this on a large scale you're back at year 2001.

Also I really don't understand this 0% interest on multiple payments. How do banks make money? Is it some sort of government regulation because of 2011. Not saying I'm happy about banks making chunk loads of money but I find it odd. I thought the whole idea of banks loaning money was to make interest from it.

 

[mini]

Although I agree with you that people are stretched and I'm noticing more people are paying in quotas at the supermarket, people also use credit & debit cards because of all the discounts and offers you get. They are not always advertised in the store as some of them are offered through the credit card companies. We get a little brochure every month or so with various offers.

We get offers for 2x1 movies, theater, 30% of restaurants, etc. through the credit card.

I should add, I really think this the credit cards & debit card offers are there to get people to trust the banks and get bank accounts again. After the crisis people stopped using banks all together. Most of the economy is "off the books" and I think both the banks and the gov't have an interest in getting people back in the "system'.

 

[PhilipDT]

Many people are banking on the inflation when they pay by credit card. If you can make 3, 6, or 12 monthly payments with no interest you save a lot because paying 100 pesos in 6 months is much less than paying 100 pesos today.

Yeah no kidding. Its like free money.

 

[Sleuth]

Many people are banking on the inflation when they pay by credit card. If you can make 3, 6, or 12 monthly payments with no interest you save a lot because paying 100 pesos in 6 months is much less than paying 100 pesos today.

This is awesome! I never thought of this before - I just assumed that it was done as people needed to break up payments to afford things.

From now on, all my purchases are going on cuotas.

Thanks!