On February 15, 2024, the Guatemalan Congress approved Decree 2-2024: Credit Card Law. The purpose of this law is to regulate the credit card market to make it transparent and protect cardholders from bad practices. To this end, it seeks to clarify the rights and responsibilities of both the card issuer and the user.

The new regulation creates the Financial Services Protection Unit, an entity that will be located within the Consumer Attention Directorate (Diaco). The role of the Diaco, complemented with the support of the Superintendency of Banks (SIB), will be to supervise financial transparency, resolve disputes over card charges and protect cardholders.

To promote transparency, the law contemplates measures such as:

• Rules for the drafting of contracts. The aim is for cardholders to know in advance all the possible charges they may incur in and under what circumstances, as well as their rights and obligations.
• A new mechanism for resolving disputes over charges not recognized by the user.
• The issuer will have to inform the user of any changes in the interest rates. They must include this information in their bank statements 45 days previous to the change.
• The SIB will have to publish a monthly report with the average interest rates of each credit card issuer so that the user can compare them.
• Financial education programs.

To protect the user, the law prohibits practices such as:

• The charging of interests on accumulated interests, commissions and/or late payment fees. From now on, interests may only be charged on the initially granted credit and not on the total accumulated debt.
• Denial of payment agreements. The user will have the right to request a payment agreement when they consider that their financial situation has deteriorated or does not agree with changes in the interest rate.
• Continued harassment through telephone calls. Issuers will no longer be able to harass users, their relatives, or acquaintances to collect debts as frequently as they currently do.
• Hidden charges. Charges that are not detailed in the contract may not be made.
• Collect all or part of the debt with funds from the cardholder's monetary and/or savings accounts without their authorization.

To ensure compliance with the law, the decree establishes new offenses. In addition, it criminalizes card cloning and illegal card payments to combat these fraudulent activities. Finally, it authorizes cooperatives to issue credit cards to encourage competition in the market.

For further information, please do not hesitate to contact us.