Indebtedness assails 78% of families in Brazil

The percentage of Brazilian families with debts falling due grew 0.7 percentage points in July, reaching a record 78 percent of households in the country. The increase from July 2021 stood at 6.6 percentage points. The data can be found in a survey released today (Aug 8) by national trade and tourism confederation CNC.

Types of debt

Of the people facing indebtedness, 85.4 have incurred have credit card debts, on the wane for three consecutive months now. In April, the proportion was 88.8 percent. In CNC’s view, the fall in credit card debt came as a result of the search for cheaper interest.

“This downward trend in the proportion of people with credit card debt shows that families have sought cheaper credit alternatives in the face of high interest rates. As a result, installment plans with stores and personal credit were the modalities that saw an increase in indebtedness early in the first half-year, representing 18.8 and 9.2 percent of the total number of families with debts respectively,” the confederation’s statement reads.

Default

Families with debts or bills overdue totaled 29 percent in July, compared to 28.5 percent in June this year and 25.6 percent in July 2021. Of these, 10.7 percent said they were unable to pay their commitments—up 0.1 percentage points from the previous month and down 0.2 percentage points against the same period last year.

The labor market is said to be absorbing workers with lower educational levels and informally, which increases the uncertainty surrounding personal finance management. In addition, CNC noted, high inflation flattens incomes and makes organizing the family budget more difficult.

The data were collected across all state capitals plus the Federal District, covering some 18 thousand consumers.