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While Lula calls for measures to relieve family debts, the Central Bank says it will seek cheaper credit alternatives without limiting interest rates by force
The Central Bank of Brazil rejected the idea of freezing credit card interest rates, even with the rise in family debts driven by revolving credit, which can exceed 400% per year when the bill is not paid in full.
The statement was made by the president of the Central Bank, Gabriel Galípolo, after President Luiz Inácio Lula da Silva stated that he asked the newly appointed Minister of Finance, Darío Durigan, for proposals to facilitate debt payments, citing the gap between strong economic performance and the reality of indebted families.
Why the Central Bank rejects freezing credit card interest rates
According to Galípolo, the central concern is that price controls can reduce the supply of credit and create a dangerous side effect. In the Central Bank’s assessment, by limiting interest rates by decree, the market tends to restrict lending, which can leave some consumers without access.
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The interpretation presented is that those already in debt may not feel relief in practice, while new borrowers may be excluded due to a smaller supply of credit.
Interest above 400% per year and the engine of debts in revolving credit
The Central Bank pointed out that family indebtedness is mainly driven by balances in revolving credit cards, precisely when the consumer cannot pay the full bill and carries the amount over to the next month.
In this scenario, the debt grows quickly because the interest on revolving credit is very high and accumulates month after month.
Lula calls for relief and the Finance Ministry promises alternatives for debts
On the government side, Lula stated that he tasked Darío Durigan with proposing alternatives to facilitate debt payments, placing the issue as a priority given the impact on family budgets.
The political signal is clear: reducing the pressure of family debts has become a public demand, especially when the official discourse highlights the strength of the economy.
What the Central Bank says it can do without freezing interest rates
Galípolo stated that the Central Bank’s strategy is to create alternatives that give consumers more advantageous options, rather than restricting current options. He did not detail which measures are on the table.
In practice, the Central Bank indicates a direction: to expand pathways for renegotiating and accessing cheaper credit, without applying a freeze on credit card rates.
Credit cards on the rise: 100 million users and more debts on the radar
The president of the Central Bank also highlighted that Brazil has about 100 million active credit card users, a number that has grown sharply since the beginning of the pandemic.
With more people using credit cards, the risk is that revolving credit will push more families into debt, especially during tight budget times.
Central Bank Council and new decisions on interest rates
Sources cited in the base inform that the Central Bank is expected to make more decisions related to interest rates due to vacancies on the council. This reinforces that the issue may continue to be discussed, even without a freeze.
The signal is that the debate should advance through credit alternatives, rather than through interest rate controls.
Pressure for a response to debts
With the election approaching, the issue of the cost of credit and debts is likely to weigh even more on the public agenda and the demand for measures.
Do you think freezing credit card interest rates would help reduce debts or could it worsen the situation by cutting access to credit?
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