Credit card: interest rates rise again in March, even with measures that limit revolving debt | Economy

The average interest charged by banks on revolving credit card operations rose from 411.9% per year in February to 421.3% per year, in March, the Central Bank reported this Friday (3). This is the highest level since December 2023 (442.1% per year).

• Above 400% per year, this is the most expensive line of credit on the financial market. The March level is almost 40 times above the economy’s basic rate (currently 10.75% per year), which serves as a parameter for banks to seek resources in the market.
• Credit card revolving credit can be used by those who cannot pay the full amount of the bill on the due date, but do not want to default.
• According to analysts, this line of credit should be avoided. The recommendation is that bank customers pay the entire invoice amount monthly.

The numbers also show relative stability in concessions (new loans) in the credit card rotation. In March, R$29.7 billion were contracted in this type of credit. Level close to the average for 2022 (R$28.38 billion per month) and 2023 (R$30 billion per month).

March was the third month of validity of the decision that limited total credit card debt.

According to the new rule, for example, if the initial debt is R$100, the total debt, with interest and charges, cannot exceed R$200. The cost of the Tax on Financial Operations (IOF), however, is outside this calculation. The rule only applies to debts contracted from January onwards.

In January, the president of the Central Bank, Roberto Campos Neto, indicated that the solution adopted by the CMN to limit credit card debt – which had already been previously approved by the National Congress and sanctioned by President Lula – would be temporary.

“We still need to study this issue, see how we will do it in a balanced way. We are starting to see default rates improving, it’s a good sign (…) We don’t have a solution today, we evaluate several solutions. We have a short-term solution that it has improved a little, we need to come to an understanding”, he declared at the time.

The discussion about revolving credit card interest has also generated friction between banks and independent acquirers, the so-called machines.

As a backdrop to the discussions, there is interest-free installments on credit cards, questioned by banks, but defended by the economic team and independent acquirers.

In March of this year, according to the Central Bank, the average interest rate charged by banks in operations with individuals and companies increased slightly by 0.2 percentage points in March, to 40.5% per year.

This is the highest level since December 2023, when it was at 40.8% per year.

BANK INTEREST RATE

in % per year

Source: CENTRAL BANK

The interest was calculated based on free resources – that is, it does not include the housing and rural sectors and the National Bank for Economic and Social Development (BNDES).

• The average interest rate charged on operations with companies fell from 21.4% per year in January to 20.9% per year in March this year. With a drop of 0.5 percentage points, it reached the lowest level since December 2021 (19.7% per year).
• In operations with individuals, interest rates rose from 52.6% per year in February to 53.4% ​​per year in March this year. With an increase of 0.8 percentage points, it reached the highest level since December 2023 (54.2% per year).
• In special checks for individuals, the rate fell from 132.1% per year, in February, to 127.6% per year in March 2024. As a result, it reached the lowest level since January 2024 (125.8% per year). year).

Already the The total volume of bank credit on the market, according to the Central Bank, rose 1.2% in March this year, to R$5.9 trillion. At the end of last year, it was R$5.78 trillion.

“This result resulted from increases of 2.0% in the balance of credit operations to legal entities and 0.7% in that of individuals, which totaled R$2.3 trillion and R$3.6 trillion, respectively”, informed the Central Bank.

• The BC reported that the balance of free credit to individuals grew 0.4% in March, and 8.2% in twelve months, with emphasis on the increases in financing portfolios for the acquisition of vehicles (1.5% ), non-consigned personal credit (1.4%), and consigned credit for INSS beneficiaries (1.2%).
• The balance of free credit to companies grew 3% both in March and in 12 months. Contributing to this performance, informed the BC, was the increase in the discount portfolio of bills and other receivables, of 14.2%, as well as the increases in the total credit card portfolios (14%), and in advances on foreign exchange contracts. (ACC), 5.6%.

According to data from the Central Bank, the average default rate recorded by banks in credit operations remained stable at 3.2% in March — the highest level since November 2023 (3.4%).

• In operations with individuals, default fell from 3.7% in February to 3.6% in March.
• Corporate defaults fell from 2.6% to 2.5% from February to March this year.

See how the new credit card interest rule works