Brazilians Are Paying 54% a Year in Interest for Personal Credit

Brazilian currency, the real Brazil's National Financial System volume of credit reached 1.085 trillion reais (US$ 669 billion) in July, a figure equivalent to 37% of the GDP (Gross Domestic Product) i.e. the sum of goods and services produced in Brazil during that whole month.

This is the highest percentage ever recorded since the Central Bank of Brazil began keeping track of the results, in July 1994. Previously, the highest value had been recorded in January 1995, when the rate was 36.8%, according to figures supplied by the Central Bank.

The average interest rate (natural persons and legal entities) has increased. The annual percentage went up from 38%, in June, to 39.4% in July. In the 12-month period ending in July, the average rate grew 3.5%.

So far this year, there has been an increase of 5.6%. In the case of operations targeted at natural persons alone, the annual average rose from 49.1% in June to 51.4% last month. This is the highest rate since January 2007, when the annual rate was 52.3% a year.

The average annual interest rate for companies (legal entities) went up from 26.6%, in June to 27.5% last month, the highest since August 2006, when the rate was 27.9%. Interest on the overdraft facilities remains high.

In July, they reached 162.7% a year, the highest figure since August 2003 (163.9%). In June, the rate was 159.1% a year. The increase totaled 23.5% over a 12-month period, and 24.6% this year.

The surplus from overdraft facilities for natural persons reached 15.561 billion reais (US$ 9.5 billion) in July, representing reduction of 1% over the previous month. The population of Brazil resorts more to personal credit (118.805 billion reais, or US$ 73.2 billion) and other modalities, such as credit cards (20.468 billion reais or US$ 12.6 billion).

Consumers are also paying more for personal credit, which includes operations deducted from paychecks. The interest rate went from 51.4% in June to 53.6% in July. So far this year, the increase was 7.8%¨and in the 12-month period, 3%.

Interest rate on purchases of vehicles rose from 31.1% a year to 33.5% a year. This year, there has been growth of 4.7% and in the last 12-month period, 4.8%.

Overall insolvency, considering delays of over 90 days, totaled 4.2%, as against 4% in June. For legal entities, insolvency remained at 1.7%, and for natural persons it increased from 7% to 7.3%.



  • Show Comments (7)

  • João da Silva

    [quote]No doubt that the next job of Mantega will be in the board of a large bank, with top salary and even more perks. [/quote]

    I wonder if that “large bank” will be Itau or Bradesco!!! 😉 😉

  • ch.c.

    Joao “I see a 1 Real currency washed and hanged to dry.”
    In my view it is the Brazilian society that is hanged and dried !
    😀 😉

    By the way do you recall when a few weeks ago I stated that instead of raising your interests rates Brazil should better reduce the
    amounts of new loans by increasing the minimum reserve capital of the banking system that will have a far higher result to fight inflation than just increasing rates ?

    Wellll Mantega answered : he will not reduce consumers credits !
    Not very clever. But he wont be at his job when the problems will surface.

    No doubt that the next job of Mantega will be in the board of a large bank, with top salary and even more perks.
    The Brazilian banks owes him some thanks, a lot of thanks !

    This said also I told you, inflation is not going any higher for the time being.

    But dont expect a cut of rates charged to consumers. Eventually they have room to go higher !
    With Robin Crook blessings of course.

  • João da Silva

    [quote]Joao – you vanished!
    written by AUGUSTUS, 2008-08-27 22:40:51 [/quote]

    No , I did not vanish. Was in Paulecia for a few days just on a fact finding mission.

    Alas, Old Ch.c is right !!!!!! (as usual)

    BUT,BUT………….., I observed (with my eagle eyes, aided by my monocles) that you are engaged in a mortal combat in another thread with some unscrupulous ruffians who would never see eye to eye with such scholarly gentleman like you 😉


    Joao – you vanished!
    It’s a pity that you vanish so often…
    Perhaps the Interest rates are so high that you must limit your internet access nowadays?
    Well…. Jeeves has been dismissed 😀

  • João da Silva

    Brazilians Are Paying 54% a Year in Interest for Personal Credit
    In the picture, I see a 1 Real currency washed and hanged to dry. Can anyone explain the significance of this powerful image ?

  • ch.c.

    Laugh….laugh…laugh !!!!!
    and then what do we read from the Brazilian Dept of Disinformation : A) interests rates are the lowest on record !!! B) available credit is growing fast !!!!

    What most Brazilians have not understood yet is that their interests rates, after inflation, have not changed much and went even higher than before. Of course I was the idiot.
    When I stated that at least 30 times here, sure I was the idiot and not those paying these rates that would put the lenders in jail if they were so high in developed countries.

    Ohhhhh and when I stated than on overdrafts the rates are over 100 % I was conservative, because they are at 163 %…PER YEAR !!!

    And when I stated many times that in Brazil they buy 1 goods but pay for 2, 3 or 4 depending of the length of the loan, of course I was the idiot again.

    Let me repeat loud and clear : BRAZILIANS ARE MASOCHISTS, the more you whip them the more they applaude and they beg for more. The more you hurt them the more you will get re-elected as their Master !

    On cars : not only their prices are higher if paid in cash than elsewhere even of the car is built in Brazil, but they boast themselves
    for to the car sales growth paying 33,5 %…PER YEAR !!!!!!
    The Brazilians banks always found the excuse of the relatively high deliquent loans to charge very high rates. Welll they are not so high as per Dept of Disinformation at the Palacio Planalto in Brasilia !!!

    Bin the Crook and his gang are also proud their slaves (consumers) are paying such high rates. Just think about it : farms using slaves provide some basic credit at even lower rates that those mentioned and the slaves cant repay forcing them to continue to work for the same farm to try to repay the debts. But the debts due to the interests rates become so high they no longer receive a small wage because it doesnt even repay the previous interests due, let alone the amount loaned.
    And the vicious circle continue.

    Stupid question : why a relatively poor country has a Palacio for their government ? You find that only in Banana Republics !
    And Brazil is nothing else than a Banana Republic and certainly NOT the best, but the worst !

    And one can then easily imagine who are the ones who a filling the various CaÀƒ¯xas 2, 3 4 or 5 of the many political parties, or how the corrupted politicians can buy Miamis condos or Mansao…..CASH. No need for a bank loan !!!!!

    What is NOT said on purpose is that on top of these amazing rates there are also various additional fees also very high making the Real Rates even higher !!!!!

    The only way for Brazil to change things for the better is to simply open the country to ALL foreign banks and not restrict them as they do now. As long there is a cartel competition wont work…by definition. Especially when the cartel is fully backed by the government/politicians as these people have their own interests in the cartel. Very Simple !!!!

    Buying a car at 33,5 % interests rates, consumers goods at 55 %, overdrafts at 163 % is certainly not good for the financial health of the borrowers when inflation is at 4 to 7 %, but paradise for the lenders.


  • bo

    54% interest a year? How in the world can anyone expect an economy to grow when banks are loaning money at this rate?

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