20% of Ecuadorians with credit cannot cover their debts, they are double than before COVID-19 | Economy | News

The use of credit cards fell amid the health and economic crisis

March 17, 2021 – 07h30

–

The 14% of Ecuadorians with credit deteriorated their score on their credit report in the last twelve months marked by the COVID-19 pandemic. Aval Buró – a firm that provides credit information to citizens and every company that grants credit – sees a general impact and a greater impact on microentrepreneurs and self-employed persons.

In his analysis, he identifies that the rate of defaulted clients has practically doubled. “Before the pandemic, 10 out of 100 Ecuadorians were going to default on their payment. In the latest analysis, it is expected that 20 out of every 100 Ecuadorians with credit in financial institutions will default on the payment of their credit obligation ”.

At the beginning of the quarantine, a third of the clients could not cover their debts. In the first month of the pandemic, the total installments that had to be paid was $ 10 billion and $ 3.5 billion were not canceled, as reported by the banks at the time. But grace periods and plans to refinance and reschedule debts were applied.

During 2020, the Monetary and Financial Policy Board implemented, with Resolution No. 609-2020-F, a temporary extension of the term to register the overdue portfolio by financial institutions, “therefore credit delinquency has remained at acceptable levels ”, indicates the Association of Private Banks of Ecuador (Asobanca). As of last October, credit card delinquencies stood at 1.75%.

One year after the pandemic, the president of Asobanca, Julio José Prado, considers that there was a cautious handling of credit cards according to the situation.

Between March and August 2020, according to central bank of Ecuador (BCE), there was evidence of a reduction in the use of this financial product and rather an increase in the use of the debit card. And “this shows that citizens were more cautious and demanded less credit in a scenario of economic recession,” says Prado.

Debit cards are now more widely used

And it is that the Central Bank analyzed the evolution of means of payment in Ecuador in this context of the pandemic and shows with figures that citizens used less and spent less with credit cards in the midst of the crisis.

The consumption with these plastics before the pandemic was a monthly average of $ 1,159 million with 17 million transactions, between April and August that average was reduced to $ 850 million and 12 million transactions. Since June, its use begins to recover slightly, but still below pre-pandemic periods.

While debit cards before COVID-19 had an average monthly consumption of $ 156 million and 5 million transactions.

In a pandemic, it was reduced to 34% of the amount and 45% of transactions in April, with $ 110 million and 3 million transactions. As of May, the amount channeled is progressively recovered, exceeding the usual average, from May to August 2020, the use of debit cards increased 32% in the amount billed for debit cards.

Deferred credit of cards was used more and less the current and rorative