Circular 13/2011 — Minimum Payment for Credit Cards

Friday, June 3, 2011 OFFICIAL GAZETTE (First Section)

BANCO DE MEXICO

CIRCULAR 13/2011, addressed to unregulated multiple-object financial societies, popular financial societies, savings and loan cooperatives, as well as financial entities acting as trustees in trusts that provide financing to the public, regarding the Provisions on Matters of Minimum Payment for Credit Cards.

A logo appears at the margin, stating: Banco de México.

CIRCULAR 13/2011

TO UNREGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES, TO POPULAR FINANCIAL SOCIETIES, TO SAVINGS AND LOAN COOPERATIVES, AS WELL AS TO FINANCIAL ENTITIES THAT ACT AS TRUSTEES IN TRUSTS THAT PROVIDE FINANCING TO THE PUBLIC:

SUBJECT: PROVISIONS ON MATTERS OF MINIMUM PAYMENT FOR CREDIT CARDS

The Banco de Mexico, in order to promote the sound development of the financial system and protect the interests of the public, considers it convenient to standardize the manner in which credit card issuers must determine the amount of the minimum payment they charge in each period. To this end, it is necessary to establish a formula that encourages the amortization of part of the credit principal with each minimum payment, thereby ensuring that the respective debts are covered by cardholders within a reasonable period.

For the foregoing, based on what is provided in Article 28 of the Political Constitution of the United Mexican States, sixth and seventh paragraphs; Article 24 of the Bank of Mexico Law; Articles 18 Bis 7 and 22 of the Law for Transparency and Ordering of Financial Services; Article 4, first paragraph, Article 8, fourth and seventh paragraphs, Article 10, first paragraph, Article 14 Bis in relation to Article 17, fraction I, as well as Article 14 Bis 1, first paragraph in relation to Article 25 Bis 1, fraction IV, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Legal Directorate and the General Directorate of Affairs of the Financial System, respectively, as well as Article Único of the Agreement on the Attachment of Administrative Units of the Bank of Mexico, fractions III and XI, has resolved to issue the following:

PROVISIONS FOR THE DETERMINATION OF THE MINIMUM PAYMENT FOR CREDIT CARDS

1. DEFINITIONS

For brevity, singular or plural shall be understood as follows:

Contract: the legal act that documents any revolving financing under which Credit Cards are issued.

Issuer: unregulated multiple-object financial societies, popular financial societies, savings and loan cooperatives, as well as financial entities that act as trustees in trusts that provide financing to the public, that issue Credit Cards.

Minimum Payment: the amount that the Issuer must require from the holder of a Credit Card in each payment period so that, once covered, the financing is considered current.

Credit Card: the disposition instrument issued under the Contract.

2. DETERMINATION OF THE MINIMUM PAYMENT

(FIRST SECTION) OFFICIAL GAZETTE Friday, June 3, 2011

2.1 Issuers must calculate the Minimum Payment for Credit Cards in accordance with what is stated in these Provisions.

The Minimum Payment will be the amount resulting from the greater of the following items:

a) The sum of: i) 1.5 percent of the outstanding balance of the revolving portion of the credit line at the cut-off of the period, without taking into account the interest of the period nor the value added tax (VAT), plus ii) said interest including the VAT, and

b) 1.25 percent of the credit line limit.

In the event that the Minimum Payment is greater than the outstanding balance of the revolving portion of the credit line at the cut-off of the period, Issuers must charge the latter.

2.2 Issuers may freely determine the amount of the Minimum Payment, provided that such amount is greater than what corresponds in accordance with what is established in item 2.1.

TRANSITORY PROVISIONS

FIRST. These Provisions will enter into force on September 1, 2011.

SECOND. The percentages for determining the Minimum Payment established in items a) and b) of Provision 2.1 will enter into force in accordance with the following:

a) The percentage referred to in item a):
i. From September 1, 2011 to January 3, 2012, it will be 0.5;
ii. From January 4, 2012 to January 3, 2013, it will be 1.0, and
iii. From January 4, 2013 onwards, it will be 1.5 as provided in the aforementioned item a).

b) The percentage of 1.25 mentioned in item b) will enter into force on January 4, 2013.

Issuers may determine a Minimum Payment amount greater than what corresponds in accordance with what is established in this Transitory Provision.

Mexico City, June 1, 2011.- BANCO DE MEXICO: The Director General of Affairs of the Financial System, José Gerardo Quijano León.- Signature.- The General Legal Director, Héctor Reynaldo Tinoco Jaramillo.- Signature.

For any inquiries regarding the content of this Circular, please contact the Department of Authorizations, Consultations and Legal Control, located at Avenida 5 de Mayo number 2, sixth floor, Colonia Centro, Mexico City, Federal District, Postal Code 06059, or at telephone numbers 5237.2308, 5237.2317 or 5237.2000 Ext. 3200.