Credit Card Interest Rate Nears 300 Percent per Year in Brazil

By Contributing Reporter

RIO DE JANEIRO, BRAZIL – The average interest rate charged by financial institutions on revolving credit cards reached 299.8 percent per year in May, according to data released by the Central Bank (BC) on Wednesday, June 26th.

This is the highest level of card interest rates since May 2018 (303.6 percent). In April, the average rate was 298.6 percent per year.

The revolving credit from the credit card can be called upon by those who cannot pay the full amount of their bill on the due date but do not want to be in default. To use revolving credit, the consumer pays an amount between the minimum payable and the total invoice. The remainder is automatically financed and posted the following month with interest.

The special cheque [overdraft] average rate fell from 323.6 percent per year in April to 320.9 percent per year in May, according to the institution. The special cheque is an emergency line of credit that allows account holders to spend a specific limit set by the bank, even if they have no money in their account.

Default, which also influences the interest rates charged by banks, remained stable at 3 percent in May, the same level as in April, according to the Central Bank. In the case of individuals, it rose from 3.3 percent in April to 3.4 percent in May and, among companies, remained unchanged at 2.6 percent last month.