MURDER, POLITICS, AND THE END OF THE JAZZ AGE
by Michael Wolraich
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Brazil’s boom teeters on personal credit bubble
By Donal on Sun, 07/17/2011 - 2:44pm |
The interest rate on credit cards in Brazil’s financial hub of Sao Paulo averages 238 percent, according to a study conducted earlier this year by Fecomercio, a federation of commerce. That means carrying a balance of $1,000 for a year results in a $3,380 tab. That cost is expected to rise, with the Central Bank of Brazil likely to raise interest rates to battle inflation.
Before, people such as Xavier, who is 24 and makes about $2,000 a month driving his cab, couldn’t get credit. Brazil was beset by hyperinflation in the 1990s and economic turbulence in the early 2000s.
When the nation brought its economy under control, banks started expanding credit offers. The number of bank credit cards in circulation has tripled to 150 million in the past eight years.
Economists say many people here are getting credit cards without knowing how to manage the debt. But for those who want to buy things and don’t have cash on hand, there is no alternative.
URL:
http://www.sltrib.com/sltrib/money/52176739-79/brazil-credit-percent-debt.html.csp
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