Record interest rates on credit cards: you're the victim.
The Brazilian Association for Consumer Protection points out that Brazilians pay an average annual interest rate of 323,14% on credit cards, almost six times more than in Peru, the second-ranked country on the list; and this despite the drop in the Selic rate (Brazil's benchmark interest rate).
Agency Brazil - Interest rates charged on credit cards in Brazil are the highest in Latin America, according to a survey released this Tuesday, the 17th, by the Brazilian Association for Consumer Protection (ProTeste). Annually, Brazilians who pay part of their bill upfront pay an average rate of 323,14%, almost six times higher compared to the second-placed country on the list – Peru, where the average annual rate is 55%.
Interest rates on credit card transactions were surveyed in seven countries in the region. Chile ranked third with 54,24%, followed by Argentina (50%), Mexico (33,8%), and Venezuela (33%). Colombia, in turn, presented the lowest rate, at 29,23%. Thirteen banks and financial institutions in seven Latin American countries were analyzed during the month of June.
According to Renata de Almeida, an analyst at the association, the economic indicators of the countries investigated do not justify the discrepancy between the rates. "The economic differences are not significant. With this, we see that the rates applied are indeed excessive," she assesses.
According to ProTeste, credit card interest rates should follow the trajectory of the Selic rate, the basic interest rate of the economy, which fell from 11% to 8,5% per year from January to June. In contrast, during the same period, the interest rates charged by banks increased from 237,9% to 323,14%. According to the association, the justification given by Brazilian banks for the high percentage is consumer default.
The analyst, however, believes that the "exorbitant" interest rates are what exacerbate default. "We advise consumers never to pay the minimum [on their credit card bill] and, if this has already happened, to take out a loan from a bank to pay off this debt, because the interest will be lower than the revolving credit card interest," suggests the analyst.
Renata Almeida criticized the lack of transparency from banks in providing data on interest rates. "With banks fighting to lower interest rates, they don't easily disclose the rates charged on credit cards. Often, you only find out the real rate when you receive the first credit card bill," she pointed out. According to her, banks and financial institutions are obligated to provide this type of information upfront.