Tuesday, June 23, 2015

Effects of Unstable Currency: Brazilian Credit Cards Now Charge 360% Interest a Year

Brazilian credit card interest has now risen to 360% a year.

In the 1980's and early 1990's Brazil faced runaway inflation. One of the main tools to reign it in was high interest rates. This, of course, impacted both consumer spending and business expansion (fewer products bought = fewer products manufactured).

Out of control spending and money printing leads to disastrous side effects in any economy including the eighth largest economy in the world: Brazil.


Juros = interest
Cartão de crédito (Rotativo) = credit card (revolving)
Cheque Especial = bank credit line
Variação porcentual ao ano = yearly percentage variation
Fonte: Banco Central = Source: Central Bank


MAX Redline said...

Here, we call that usury - unless, of course, the government does it.

T. D. said...

Usury or mafia-type loans. The major difference is that Brazilian credit card issuers don't use physical force as an incentive for repayment and the government is A-OK with it.