Argentina at its limit: 6 out of 10 families spend half of their income just on paying debts.

Credit card delinquency rates in Argentina reached a three-year high of 2.8% in March. For personal loans, the rate exceeds 4%, the highest in nine months and another sign that many families are unable to pay their debts on time.

The main reason behind this debt is necessity: more than 50% of credit card purchases are for food, according to a study by the IETSE (Institute of Statistics and Social and Economic Trends). This means that credit cards are no longer just a tool to finance an appliance or a vacation, but are used to make ends meet.

According to recent data from the Argentine Banking Association ( ADEBA ) and the Central Bank, debt levels are worsening: 56% of households spend between 40% and 60% (or more) of their monthly income just on debt payments. Added to this is the fact that more families have multiple debts at the same time. Twelve percent of households have three or more outstanding debts, a 4% increase compared to last year.

One of the factors explaining this situation is the extremely high cost of credit. For example, the Total Annual Effective Financial Cost (TAFC) of a personal loan from a private bank can exceed 199%, while at public banks it hovers between 140% and 160%. These figures are double current inflation and make it very difficult to break out of the debt cycle.

Even if you try to refinance a card, the costs remain sky-high. At some banks, if a customer doesn't even pay the minimum, the penalty rate can exceed 100% per year. This logic also applies to bank overdrafts (when you spend more than the allowed limit), with rates exceeding 40%. In many cases, this creates a "snowball" that makes it difficult to catch up.

Despite widespread card usage, data already show a slowdown in consumption. In May, card usage increased by a nominal 3.4%, but adjusted for inflation, real growth was only 1.6%. And compared to May of last year, the real increase was 70%, much lower than the cumulative inflation. The loss of purchasing power is noticeable.