Credit card interest rates hit a new record high.
The interest rate on revolving credit card debt reached a record 482,1% per year in November, the Central Bank reported this Friday, the 23rd; the rate rose 6,3 percentage points compared to October and was the highest in the historical series that began in March 2011.
Kelly Oliveira – Reporter for Agência Brasil
The interest rate on revolving credit card debt reached a record 482,1% per year in November, the Central Bank (BC) reported today (23). The rate rose 6,3 percentage points compared to October and was the highest in the historical series that began in March 2011.
Revolving credit is the credit taken by the consumer when they pay less than the full amount of their credit card bill. Yesterday, the government announced a limit of 30 days for customers to remain in revolving credit. This measure is still to be implemented and could halve credit card interest rates starting at the end of the first quarter of next year, according to Finance Minister Henrique Meirelles.
The head of the Central Bank's Economic Department, Tulio Maciel, said that it is necessary to wait for a better definition of the measures to assess their effect on reducing interest rates. "The expectation is that the measures will lead to greater rationalization of credit card use and thus a reduction in costs," he said.
He added that, even without these measures, it is currently possible to avoid the high interest rates of revolving credit by opting, for example, for installment payments on the credit card balance. In November, interest rates on installment credit reached 155% per year. "Revolving credit is for emergencies, for short periods, in some situations that require immediate credit," he specified.
Another high interest rate in the Central Bank's monthly survey is that of overdraft facilities, which reached a new record of 330,7% per year. This is the highest rate in the historical series that began in July 1994. The average interest rate for households remained stable at 73,6% per year in November, compared to October.
Credit default
Credit delinquency, considering delays of more than 90 days, for individuals fell 0,1 percentage point to 6,1%. The delinquency rate for companies fell 0,2 percentage point to 5,4%. The average interest rate charged to legal entities fell 0,5 percentage point to 29,9% per year.
This data refers to unsecured credit, where banks have the autonomy to invest the money raised in the market and set interest rates.
In the case of targeted credit (loans with rules defined by the government, mainly intended for the housing, rural and infrastructure sectors), the interest rate for individuals remained stable at 10,2% per year. The rate charged to companies fell 0,9 percentage points to 11,1% per year. Delinquency rates for households fell 0,1 percentage points to 1,9%, while for companies it remained at 1,8%.
The balance of all credit operations granted by banks rose 0,3% from October to November, but shows a 3,6% drop for the year. Last month, the balance stood at R$ 3,104 trillion. This balance corresponded to 49,5% of everything the country produces – Gross Domestic Product (GDP) – in November, compared to 49,7% in October of this year.