Meanwhile, officials have done little to regulate lenders. The average annual interest rate on Mexican credit cards in June was 31.72%, according to the Bank of Mexico. That's more than double the latest U.S. average of 14.21% cited by IndexCreditCards.com
Lenders charge that much because they can; there is little competition and no laws capping rates and fees. Mexico's banks are among the most profitable in the world and the least efficient, according to a study by Mexico's Federal Competition Commission. Two-thirds of Mexicans lack a bank account, in part because of hefty fees, long lines and notoriously bad service.
To attract more players and drive down rates, regulators have issued a spate of banking licenses to nontraditional institutions such as Wal-Mart, which has failed in its efforts to get regulatory permission to operate full-service banks in its U.S. stores.
A new law will soon require Mexican banks to disclose the full costs of their products and services, including credit cards. Consumer advocates say borrowers need more education.
Mexican consumers are so hungry for credit that some are grabbing any and every offer that comes their way, often without investigating how much interest they're paying, according to Marco Carrera Santacruz, director of market studies for CONDUSEF, a consumer protection agency.
Not Jose Contreras Ramirez. The 42-year-old accountant has five credit cards that he pays off every month to avoid interest charges.
"I'm very conscious that having credit cards is a danger," he said. "That's why I'm very orderly with my payments and I don't spend more than I have."
Miguel Ramirez Solano wishes he had done the same. He has 13 credit cards and is more than $74,000 in debt. The interest and fees have grown so fast that Ramirez's minimum monthly payment of about $2,900 is now almost equivalent to his monthly salary as a systems analyst. The interest rates on his cards range from 18% to 48%.
Now 31 and the father of three young girls, Ramirez said he developed poor habits as a younger man, slapping nearly every personal expense on his cards. As his debts mounted, he took out extra credit lines on some cards to make payments on others.
"All I was doing was getting deeper into debt," he said.
Ramirez said he approached one bank that had issued him two credit cards about taking out a mortgage on a family property that would have allowed him to pay off his card debts and slice his monthly payments by nearly two-thirds. The result, Ramirez said, was a classic Catch-22: He was rejected for having fallen behind on some credit card payments.
Ramirez said another bank put him off repeatedly when he requested a restructuring plan. He says his only recourse now is to stop paying and wait for the banks to come to him.
Ramirez blames himself for bad money management. Still, he says the banks are setting consumers up to default when they grant easy credit, then refuse to work with those like him who get in over their heads.
I "want to recognize my debt and assume it," Ramirez said. "But they won't let me."
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marla.dickerson@latimes.com
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Times staff writers Cecilia Sanchez and Maria Antonieta Uribe contributed to this report.
