Colombian credit offers speak two languages: the monthly rate (M.V.), which looks small, and the effective annual rate (E.A.), which tells the year's full truth with compounding included. A 1.9% M.V. sounds harmless; annualised it's 25.3% E.A. The conversion isn't multiplying by twelve — compound interest doesn't forgive.
The only fair comparison
Two offers only compare E.A. against E.A. If one bank quotes M.V. and another E.A., ask for both in effective annual terms — they're required to provide it. Our comparator sorts everything by ascending E.A. for exactly this reason: it's the only column where nobody wears a costume.
What the E.A. leaves out
Two costs live outside it and move the final math. The handling fee (on cards and some products: 15-35 thousand pesos monthly, or $0 at Nu, RappiCard and Lulo) and debtor life insurance, which on long loans and libranzas can add millions to the total.
The right question at any desk is one: «what do I pay in total, everything included, if I make every payment?».
The ceiling that protects: usury
No formal rate can exceed the usury cap — 1.5 times the Interés Bancario Corriente the Superintendencia Financiera certifies monthly. Consumer credit has one ceiling; low-amount credit (small fintech loans) has another, considerably higher. Both current figures live in our <a href="/glosario/tasa-usura">usury glossary entry</a>.
The example that grounds it
A 10-million loan over 36 months. At 18.12% E.A. (Lulo's entry rate) the payment is around 355 thousand and the total near 12.8 million. At 26% E.A., the payment rises to 395 thousand and the total passes 14.2 million. Eight E.A. points = one million four hundred thousand pesos.
That's why you quote at two or three places, not one.