Happy Friday! Today, we talk about a life-changing regulatory change for banks and credit card issuers. When Brazil will hit full employment. And U.S. tourists get some slack (for a few months).
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Banking and credit card industries take a regulatory hit
Starting this week, interest on unpaid credit card debt in Brazil cannot exceed 100 percent of the original amount due. In November, so-called “revolving credit” rates (created when clients don’t pay their full credit card bill) stood at an eye-watering 434.4 percent a year, according to Central Bank data.
State of play. The cap, imposed by the National Monetary Council, follows a 2023 law that gave banks and other industry players 90 days to find a regulatory alternative to lower the costs and delinquency rates for this type of credit. As a consensus was not reached, the 100-percent cap came into effect.
- Central Bank data shows that of the 63 regulated institutions that operate directly with credit cards, only nine reported an average interest rate below the proposed 100-percent cap.