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Delinquency in Credit Card Revolving Credit Reaches 57.6% in Brazil, Historically High Level. Abusive Interest Rates and Use for Basic Expenses Worsen the Issue.
The delinquency rate in credit card revolving credit reached 57.6% in Brazil, according to consolidated data from the Central Bank analyzed by Genial Investimentos. Despite a slight drop of 1.2 percentage points in the month, the index remains at a historically high level and concerns banks, fintechs, and regulators.
The revolving credit is activated when the consumer pays only the minimum amount or part of the bill, accumulating the remaining balance with interest rates that can exceed 450% per year at traditional banks. With such high rates, any prolonged delay creates a multiplicative effect on the debt, putting millions of Brazilians at financial risk.
Credit Card Revolving: The Most Expensive Credit in the Country
The credit card is the most expensive option in the market. When the customer does not pay the full bill, the balance goes to revolving credit, which has a maximum term of 30 days as determined by the Central Bank. After this period, the amount must be paid in installments, with lower interest rates than pure revolving credit, but still much higher than other credit lines.
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On average, fintechs offer better conditions: annual interest rates in revolving credit of about 167%, compared to 451% at traditional banks. Still, the high cost keeps delinquency high, as most consumers cannot settle the balance quickly.
Why Is Delinquency So High?
Analysts point to a combination of factors explaining the 57.6% rate:
- Economic Slowdown: the purchasing power of families is compromised by the high cost of living, pushing more people to use credit as a supplement to their income.
- Easy Access to Credit Cards: facilitated issuance and relatively high initial limits encourage usage without planning.
- Use for Basic Expenses: supermarkets, utility bills, and internet costs increasingly paid with credit, leading to accumulated amounts that are hard to settle.
Impact on Banks and Consumers
For the financial system, such high delinquency means increased provisions for doubtful debts and the risk of falling margins. For consumers, it represents the escalation of unpayable debts and the possibility of negative credit, which restricts access to new credit.
Even with the Central Bank’s policy to limit the time in revolving credit, the issue has not significantly declined, showing that the problem goes beyond regulation and is linked to the continuous use of cards as an extension of income.
How to Exit Revolving Credit and Avoid Over-Indebtedness
Experts recommend prioritizing the full payment of bills, negotiating debts with the bank to seek lower rates, and if possible, switching to options like personal or payroll loans, which typically have lower interest rates. Additionally, reducing the number of active cards and maintaining strict control over expenses can help avoid accumulating revolving credit.
If nothing changes, delinquency in revolving credit may continue to pressure the financial system and hinder the economic recovery of millions of families. The big question is whether banks and card issuers will rethink their credit strategies — or continue to profit from record interest rates while consumers sink deeper into debt.
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