"Bicycle" middle class: take out loans at banks 4.0 to freeze card debts and get on Now 12

by Kelvin
"Bicycle" middle class: take out loans at banks 4.0 to freeze card debts and get on Now 12

The interest-free installment plan ends in December, so people are advancing purchases by releasing limits on their plastics

The electoral campaign puts pressure on the pocket of the Argentineans, who see the panorama facing October more and more uncertain. The overwhelming victory of Alberto Fernández in the Primary reduced hopes of re-election of Mauricio Macri, although the massive march on Saturday renewed the optimism of the Government.


Against a dollar that does not give any certainty as to what its course will be, and in the context of galloping inflation, the Argentines try to resist as can the onslaught of the situation: some are stocked to beat the next price hikes and others … take out loans. For what? To "freeze" your credit card expenses.

From online banks they consign to iProUP that, to the surprise of many, the number of applications has increased up to 30% in these weeks. And they refer to these three factors that combine to make this happen:

Free quota of cards. By putting their plastics "at zero", they can get more revenue from Now 12 and bank promotions. They advance consumption that they probably cannot carry out later if the official initiative comes to an end

Change variable rate for fixed. Card balances are exposed to variable interest. That is, they may suffer changes when the Central Bank makes adjustments in its monetary policy or in the tenders of the famous Leliq

Freeze the debt. They stop paying only the minimum payment and finance the rest "prohibitive" costs. In addition, they mitigate the financial cost of that loan with the discounts and benefits they access with the card

In this context, what many Argentines are doing is resorting to fintech when looking for that "salvador" loan that allows them to cancel their plastic balances, since they are more accessible in terms of requirements, manage them more quickly and It means less paperwork.

On the side of traditional banking, it is very restrictive to lend, as a result of the current political and economic context that shows the dollar, rates and inflation with an uncertain course. "The order above is to restrict the credits until the waters calm down," the branch manager of a foreign capital entity tells the media.

The source, which asked not to be mentioned, says that "rates to discourage customer orders" went up and adds: "The UVA directly have them suspended."

"The current scenario (characterized by high rates, exchange rate escalation, level of internal economy activity that does not rebound) forces us as a bank to be even more cautious with disbursements of funds to our clients, even in Online Operations "is the warning that came to those responsible for commercial banking.

"The spirit is clearly to discourage disbursements, unless we understand that it is a good risk and that we can also have associated businesses such as adding staff payroll", he adds, in relation to salary accounts.


The big leap in fintech loan applications was recorded just after the STEP. Specifically, it was 25% with peaks of 30% in later days, companies say iProUP.

"The number of applications is growing at rates that surprise us: the last month was 35% monthly," he says iProUP Francisco Turconi, founder of Solven, a fintech that allows comparing and contracting credits.

From Wenance, the fintech "lender" of greater activity in the country, they point out that the increase is around 20% and confirm a post-PASO rebound. The two main reasons that lead customers to ask for money are to freeze debt on their cards (40%) and make spare parts at home (38%).

In Vivus they agree that the post-STEP increase has been 20% and they share that the company's strategy focuses on the granting of short-term loans to "get out of trouble."

"The average minimum amount also increased. 24% use the money to make improvements or arrangements at home, and a similar percentage goes to debt payments," says Salvador Calogero, country manager of 4Finance, owner of Vivus.

Another one that takes advantage of the "stop" of traditional banking is Ualá, the fintech that has just surpassed the record 1.2 million prepaid cards issued. His proposal covers from $ 5,000 in six months to $ 200,000 in two years.

Joaquín Diz, Risk Manager of the firm, affirms iProUP that one third of the loans are used to cover household or car expenses, another third to purchases and 20% to debt cancellation.

"It is proven that many clients perform financial reengineering. That is, to make better use of resources, cancel a debt to take another at a lower rate," adds the Ualá director.

This "release" of the quota is reflected in the stores of home appliances and marketplace of banks, in which there was an increase in purchases in installments without interest.

"Sales rose to take advantage of Now 12 and some prices that have not yet incorporated all the recent devaluation," says Alejandro Taszma, commercial director of Frávega, to iProUP. As for the type of acquisitions, they highlight the growth of several categories has been even. "

"We were surprised. After the STEP, sales in our marketplace climbed more than double," they point to iProUP from a frontline bank, realizing the interest of a large number of people to obtain financed products.

What's coming

Despite its more "lax" policy, Fintech have a lower bad debt percentage than the traditional financial market, which, according to the BCRA, was 4.9% last month.

"The latest indicators show us that the delinquent portfolio is 3.8% at 30 days, an indicator considerably better than expected for our sector in a context like the current one," says Calogero, of Vivus.

According to Fabio Izzo, Vice President of Risk at Wenance, "there has been no deterioration of this indicator in recent weeks," despite the fact that "in the last 15 months the real economy is affected by inflation and the recession."

In the case of Ualá, whose loan offer was recently launched, the 30-day delinquency is 1.4% of the portfolio. "Given the volatility of the exchange rate, the payment chain could be resentful, especially in people who have a variable income as monotributistas and autonomous," says Diz.

The rate of return or return rate of fintech (that is, people who ask for financing again) is another example of the need that many have to settle their accounts: half of the users request one again after having canceled the previous one.

"50% take another loan two or three months later, which responds to our policy of benefiting good customers with better conditions," remarks iProUP Lucas Mayorca, Wenance Product Manager. In Ualá, that rate reaches 47%, while in Vivus it climbs to 55%.

Despite the uncertain political and economic landscape, executives project that online credits will continue to grow. In fact, according to the 217 companies surveyed by the Fintech Chamber, the loans sector is the most nourished, with 58 companies.

The Ualá manager affirms that the rise of fintech in the country will result in a "maturation of the industry" that will go beyond any local situation. "The best proposals will be consolidated, that is, those that offer lower costs and greater usability as added value," he concludes.

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