Asunción, Paraguay – The Paraguayan Cooperatives Institute (INCOOP) has officially announced the maximum interest rate limits for credit cards and loans to be applied in June 2025. This measure is based on Law 5476, enacted in 2015, which stipulates transparency and protection of rights for credit and debit card users. Its purpose is to prevent cooperatives from imposing excessive interest rates and to strengthen consumer protection.
Credit Card Interest Rate Ceilings
According to INCOOP's communication 17/2025 dated May 27, 2025, the maximum effective interest rates applicable to credit card usage from June 2025 are as follows:
Local currency (Guarani): 16.56% annually
Foreign currency: 11.49% annually
These interest rate ceilings have been directly communicated to cooperatives, central cooperative federations, cooperative federations, and general cooperative confederations, aiming to establish uniform interest rate application standards across the cooperative sector.
Usury Interest Rate Ceilings for Loans
In addition to credit card interest rates, INCOOP has also clarified the maximum interest rates for loans that will be considered usurious. This measure aims to prevent cooperatives from imposing excessive interest rates beyond legally permitted limits. The loan interest rate ceilings applicable in June 2025 are as follows:
Local currency (Guarani): 28.04% annually
Foreign currency: 10.59% annually
According to Paraguayan Law 5476/2015, the interest rate applicable to credit cards cannot exceed three times the average deposit rate published monthly by the Central Bank of Paraguay (BCP). This was introduced to prevent cases where some financial institutions applied usurious interest rates exceeding 50% before the law's implementation. Following the introduction of this law, credit card interest rates initially dropped to around 15% and have fallen as low as 10.24%.
Penalties for Violations and Enhanced Consumer Protection
INCOOP has warned that in cases of violation of the announced interest rate ceilings, it will impose special controls and strict sanctions. Cooperatives must strictly adhere to Law 5476/2015 and related regulations, and any violations will result in legal responsibility.
Consumers are advised to immediately report to the relevant authorities if interest rates on their credit card or loan transactions exceed the legal limits. Such reports play a crucial role in enabling INCOOP to detect and sanction illegal financial practices. INCOOP plans to actively work to ensure that consumers can access credit card and loan services in a more transparent and fair financial environment through these measures.
Background and Impact of Law 5476/2015
Law 5476, enacted in 2015, specifies "Regulations on Transparency and Protection of Rights for Credit and Debit Card Users." This law was introduced because, prior to its implementation, there was a frequent occurrence of issuing entities demanding excessive interest, fees, and other incidental costs in the credit and debit card market, which lacked clear regulation.
The primary objectives of this law are to effectively protect consumer rights and ensure fairness in market competition. Following the law's implementation, operational standards for credit card issuance, usage, and cancellation procedures were established, and the Central Bank of Paraguay was tasked with determining the maximum interest rates that credit card issuing entities could impose.
However, in the initial stages of the law's implementation, there was a short-term impact on the market, such as the immediate cessation of purchase promotions between some credit card issuing entities and merchants. Nevertheless, in the long term, it is evaluated as having contributed to strengthening consumer protection and increasing transparency in the financial market.
INCOOP's latest announcement is expected to ensure that the cooperative sector operates within the financial market's regulatory framework and contributes to reducing excessive burdens on credit card and loan usage, which are vital financial tools for the general public. This is part of ongoing efforts to maintain the soundness of Paraguay's financial system and protect consumer rights.
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