The real jungle appears to be inside the retail stores

Buying on credit is expensive anywhere, but in Costa Rica shoppers may face effective interest rates as high as 119 percent, according to a study by the economics ministry.

The study found that someone buying on credit could end up paying three times the cash price for a household appliance.

Paying cash is not always the answer, the study found. The ministry said that the cash price of some items can differ by 61 percent.

The Ministerio de Economía, Industria y Comercio did the survey at the beginning of the month in anticipation of the Día de la Madre Aug. 15. Appliances are big gift items on that day.

The ministry and its Dirección de Apoyo de Consumidor periodically conducts price surveys during the year, mainly around holidays.

Some of the findings were startling enough to be shared with a legislative committee that is looking into the credit industry. Mayí Antillón, the minister, characterized some of the credit systems as abusive.

One help to consumers is a law that entered into force in November that requires merchants to inform buyers who use credit of the nominal and effective interest rates they will pay on a particular item. The effective rate includes the price of the item and other costs, such as commissions, administration and insurance.

Costa Ricans are big credit shoppers, and generally it is the less educated residents who suffer the most because they do not understand how the interest adds up.

One purpose of the study was to see if merchants were following the law with regard to providing information on credit rates.

The ministry found that stores that maintain their own system of credit offer rates that range from 42 percent to the high of 119 percent a year. Credit cards range from 40 to 50 percent, and bank credit has an annual average of about 25 percent, said the ministry.

So it is the shopper who uses the store’s own credit system who pays the most. Add to that the fact that the price may be inflated to begin with. Merchants generally jack up prices around holidays. In fact, now that the Día de la Madre has passed, some stores are promoting sales.

The survey was mainly interested in items like rice cookers, electric frying pans, refrigerators, flat-screen televisions and electric stoves.

In the example of an Atlas refrigerator the surveyors found that Importadora Monge offers a 45.34 percent interest rate for the product that has a cash price of 264,000 colons, about $525. Buying the refrigerator there on credit would eventually cost a shopper 442,485 colons, about $880, said the survey.

But if the shopper purchased the same refrigerator at Hogar Feliz. They would pay an interest rate of 75.85 percent on a product priced at 327,890, about $652. To pay off the refrigerator with a credit agreement would cost 838,476 colons, about $1,667, the survey said. Hogar Feliz also would run up the price on a 32-inch flat screen television from the ticket price of 358.800 colons, some $713, to a credit price of 900,180 colons, about $1,780.

Among all the stores surveyed in the metro area prices of identical products differed by as much as from 43.34 percent to 61.78 percent.

The firms that offered the lowest cash price were Ricesa in Santa Ana with 26 mentions and El Verdugo on Avenida 4 in San José with 23. Play in Zapote and the Casa de los Precios Bajos in Santo Domingo de Heredia were tied for third with 19 mentions each.

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