Brazil is huge and full of superlatives.

Brazil’s 210MM inhabitants are extraordinarily concerned with hygiene, appearance and esthetics: the #1 consumers of cosmetic surgery, deodorant and perfumes. They also lead the world in pet care expenditures, cosmetic dental treatments, and flat-screen TVs.

As relatively recent members of the consumer society, they have a limited average education; many lose control over their household budgets. Typical Brazilians seldom pay cash for large purchases; they discovered almighty Credit, and recent populist governments encouraged its use to enable emerging middle-class families to enjoy what were once luxury goods.

How much does credit cost in Brazil?

Another superlative: Brazilians not only pay heavy import taxes on most foreign goods, they also endure the world’s most expensive credit.  With inflation below 4%, Brazil’s Interbank Rate (SELIC) attained its lowest point in history, 6.5%, but credit remains astoundingly expensive: some credit modalities exceed 6.5% monthly.

Average annual credit card interest from Brazil’s five main banks in 2018 was a modest 231%, far lower than in previous years.  Other credit cards have even higher rates! Brazilians resort to numerous alternative credit tools to facilitate their purchases. In Brazil, you can buy a pair of jeans in six monthly installments!

What is the profile of a typical debtor?

Most adult consumers have some debt, currently 60%, 23% are behind on their payments, and 9% admit they will default.  An average debtor has four loans totaling US$1,177 (4.4 times the monthly minimum wage of US$265).

Higher income households are not exempt: Debtors earning more than ten times Brazil’s minimum wage are 55 days behind in payments, while lower-income households are 65 days late.

Usually debt includes
the costliest of all:
Credit Cards

Card interest rates…

can quadruple a debt…

…in one year.

Credit Vehicle % of Debtors with this Type of Debt
Credit Card 76
Installment Payments 15
Auto Loan 11
Personal Loan 10
Home Loan 9
Checking-Account Overdraft 6
Payroll Loan 6
Other 3
Multiple types, total >100% 136%

What do the debtors need to pay off?

That ballooning effect causes credit card debt to occupy 29% of total consumer debt, followed by household utilities, then financing offered by retailers, then telecom services like cellphone and internet bills.

What is credit card penetration in Brazil?

About 60 million adults have credit cards in Brazil. Card use increased 12% in Brazilian currency in 2018, despite a slow economy. The trend is reversed when converted to USD, because the BRL fell against the dollar, as did most currencies.

Year Total Credit Card Transactions BRL Average Value of BRL in USD Total Credit Card Transactions in USD
2017 R$749.7B US$ 0.31 $235B
2018 R$842.6B ↑ US$ 0.27 ↓ $228B ↓

Where in Brazil do consumers owe more?

Consumer debt across Brazil’s five great regions tracks the population distribution fairly well, but the discrepancy between consumption and debt reveals their very different economic profiles:

  • The populous and wealthier Southeast has proportionately more consumption than debt.
  • The poorer Northeast and North have the worst situation, with more people and debt than buying power.
  • Brazilians in the South have the most comfortable situation: proportionately more consumption and less debt than their population.