Credit Card Debt is Horrendous for Panamanians

Credit cards have become an extension of available resources to compensate for the lack of cash at times when the cost of goods and services tends to increase, and even more so when there are travel plans for the World Cup or regular vacations.  There are approximately 903,000 bank-issued credit cards in circulation in the country, with an average balance of $3,356 each. In the last year, the outstanding balance increased by 9.16%, while it is estimated that 9.25% of those who own this product report being more than two months in arrears.

Holding unpaid credit card debt in Panama is particularly bad due to the country’s high interest rates (often 20% to 26%+ APR) and heavily used credit rating systems. Local economic reports show many Panamanians carrying debt 3 to 5 times their salary, leading to high delinquency rates and severe financial stress.  Managing or eliminating this debt effectively involves several localized financial and legal mechanisms:

• High Cost of Borrowing: Revolving balances can quickly spiral due to compounding interest. Local banks, such as BAC, frequently apply high monthly interest rates to unpaid balances.

Credit Bureaus: Panama utilizes robust credit history tracking (like the APC or Asociación Panameña de Crédito). Missing payments negatively impacts your credit score, making it extremely difficult to secure future loans, mortgages, or even certain jobs.

• Compra de Saldos (Balance Transfers): Many local banks offer balance transfer or consolidation loans known as compra de saldo. These can secure a lower interest rate, provided you commit to paying off the balance rather than continuing to spend.

• Statute of Limitations: Commercial law in Panama features a statute of limitations (prescripción de deudas). If a creditor fails to legally litigate the debt within a specific timeframe, debtors can be legally released from it, though this often requires intervention through the Panama Legal Center.