Default among Brazilian families still on rise

The most common type of debt is still the credit card

Published on 08/11/2022 - 11:22 By Alana Gandra - Agência Brasil - Rio de Janeiro

The percentage of Brazilian families with debts in October stood at 30.3 percent, reaching a record 78 percent of households in the country. There was an increase of 0.3 percentage points in relation to September, and 4.6 percentage points when compared to October last year. The data can be found in a survey released today (Nov. 8) by the national trade and tourism confederation CNC.

The rise of 4.6 points in 12 months was the highest recorded in the annual comparison since March 2016, CNC said. The indicator has risen for the fourth consecutive month.

The increase in default occurred even with the relative stability in the proportion of indebted. In October, the percentage of families with debts falling due reached 79.2 percent. The indicator fell 0.1 points in comparison to September, but rose 4.6 percentage points in relation to October 2021. According to CNC, debts on credit cards (86.2%) and overdrafts (5.1%), which charge the highest interest rates, are pressuring the increase in the proportion of indebtedness.

According to CNC, the increase in default can be explained by the combination of a high level of indebtedness and high-interest rates. This scenario makes it difficult to pay off all financial commitments within the month, even with the progressive improvement in the labor market, the drop in inflation and income transfer policies reducing the proportion of indebted people.

Translation: Mário Nunes -  Edition: Nira Foster

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