Business · Economy · 1 hr ago
Richer Brazilians increase use of costly emergency credit as poorer borrowers pull back
In Brazil, higher-income borrowers have increasingly used credit card revolving debt and bank overdrafts over the past three years.
These are emergency forms of borrowing, and their interest rates are among the highest in the market.
The amount owed by people earning more than 10 minimum wages rose 93% after inflation between July 2023 and July 2026, reaching 30.3 billion reais.
By contrast, balances for borrowers earning up to five minimum wages fell 10.6% over the three-year period.
Economists say higher-income households have faced worsening finances, while banks have focused more lending on people with higher incomes as defaults among poorer borrowers rose.
A rule introduced in 2024 limits credit card revolving debt and accumulated interest to twice the original debt.
The data show a shift in who carries this costly debt, but do not set out what may happen next.
Brazil’s wealthier borrowers have increased their use of credit-card revolving loans and overdrafts, while use among lower-income borrowers has fallen, according to Central Bank data.
Between July 2023 and July 2026, the inflation-adjusted balance owed by borrowers earning more than 10 minimum wages rose 93% to R$30.3 billion.
Their share of the total borrowed through these credit lines rose from 13.1% to 23.3%, while the share for borrowers earning up to five minimum wages fell from 69.4% to 57.4%.
Economists cited by UOL link the shift to worsening finances among middle- and higher-income households and banks directing more credit to higher earners amid rising defaults among poorer borrowers.
- Who
- Brazilian borrowers, with use rising among higher-income groups and falling among lower-income groups.
- What
- Use of costly credit-card revolving loans and overdrafts has increased among richer borrowers and declined among poorer borrowers.
- When
- The reported trend covers the three years to July 2026.
- Where
- Brazil.
- Why
- Economists attribute it to worsening finances among middle- and higher-income households and banks focusing credit offers on higher earners as defaults among poorer borrowers rose.
This story does not have two clearly opposing sides.
The inflation-adjusted balance owed by borrowers earning more than 10 minimum wages rose 93%.
A rule took effect limiting credit-card debt after missed payments to twice the original amount.
Central Bank data put monthly interest rates at 15.18% for revolving credit and 7.43% for overdrafts.
CNC data showed 71.9% of families earning more than 10 minimum wages were in debt.
UOL published its report on the diverging use of emergency credit by income group.
- High-income debt growth
- 93% inflation-adjusted rise, July 2023 to July 2026
- High-income balance
- R$30.3 billion in July 2026
- Share of total credit
- Above 10 minimum wages: 13.1% to 23.3%
- Low-income share
- Up to 5 minimum wages: 69.4% to 57.4%
- Monthly interest rates
- Revolving credit: 15.18%; overdraft: 7.43% in August 2026
What people are saying
To maintain their consumption levels, families began taking on more debt and committing more of their income.
Defaults reached such a level, as a consequence of high income commitments, that the market itself made adjustments.
But high interest rates and predatory credit supply affect the market as a whole.
Sources
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