Credit card interest hits 16-year peak
Credit card interest rose from 295.48% per annum in April to 304.03% in May
Facing a four-fold debt growth in a year – this is what is in store for debtors with revolving credit card debts. According to a survey released Wednesday (June 10) by the National Association of Finance Executives (ANEFAC), credit card interest rose from 295.48% per annum in April to 304.03% in May.
The rate is the highest since March 1999, when it reached 354.63% p.a. This means debtors owing R$1000 ($324.22) to credit card companies who are unable to repay their debt end up seeing their debt soar to R$4,040.30 ($1,309.96) in 12 months.
Overdraft interest rose from 205.06% a year in April to a yearly 210.44% in May, its highest level since January 2003 (220.06% p.a.). At this rate, if you run up a R$1,000 ($324.22) overdraft, in 12 months you end up with liabilities of R$3,104.40 ($1,006.52).
Other credit rates for individuals also rose last month compared to April. The average interest for retail credit rose from 82.90% to 83.94% p.a. The average rates for car loans based on direct consumer credit (CDC) rose from 27.27% to 28.02% p.a.. Interest on personal bank loans increased from 60.10% to 61.22% a year and the rates for loans through finance companies went from 139.24% to 140.85% a year.
According to ANEFAC, the average personal lending rates closed out May at 6.87% per month (121.96% p.a.), the highest level since June 2010 (122.71% p.a.). The average credit rate for business loans reached 4% per month in May (60.1% p.a.), the highest level since July 2011 (61.03% p.a.).
In addition to recent increases in the SELIC key interest rate, the credit interest hike was driven mainly by a higher default risk (resulting from rising unemployment) and a rise in the Social Contribution on Profits paid by financial institutions, from 15% to 20%. According to ANEFAC, interest should continue to rise in the coming months because of the country's economic scenario, with adverse job market conditions and rising inflation putting pressure on the benchmark interest rate.
Translated by Mayra Borges
Fonte: Credit card interest hits 16-year peak
