Credit card interest tops 370 percent a year in Brazil

credit card debt
Illustration: Lauritta/Shutterstock

Interest on so-called “revolving credit” has climbed to an eye-watering 370.4 percent a year in June 2022, according to Central Bank data released this week. The Selic benchmark interest rate closed that month at 13.25 percent (it currently stands at 13.75 percent). Revolving credit is created when customers cannot pay the entirety of their credit card bills, pushing the unpaid portions into future installments.

This data is particularly concerning considering that the use of revolving credit has never been higher in Brazil — reaching BRL 224 billion (USD 42.5 billion) in 2021. 

Since June 2020, in the early stages of the coronavirus pandemic, credit card interest has gone up by almost 100 percentage points

The use of credit cards as a payment method in Brazil increased 42.4 percent year-on-year in Q1 2022. A key factor is the expansion of e-commerce, per a report by an association of credit card issuers.

Over 77 percent of Brazilian households are in debt, and 28.5 percent are in default.

Data from the Central Bank shows that Brazilians have withdrawn a net BRL 63.1 billion (USD 12.1 billion) from savings accounts between January and July, more than in any other year on record (considering the same period). 

While part of the money withdrawn may simply have been reallocated to other investments, the numbers suggest that falling wages and rising consumer prices are forcing Brazilians to take money out of their savings to make ends meet.