According to GlobalData’s Payment Cards Analytics, Brazil reported the second largest level of balances outstanding on credit cards in the Americas in 2015, largely due to the size of the market.
At $89.6bn, Brazil’s total was surpassed by the US only ($733bn), and was followed by Canada ($74.7bn) and Mexico ($22.2bn). A significant factor which contributed to this reality is the popularity of instalment credit at point of sale (e.g. retailers offering customers up to 60 instalments and advertising the item by the monthly payment rather than its total cost), which encouraged consumers to spend beyond their means and, therefore, accumulate more debt.
However, GlobalData’s Credit Card Customer Analytics revealed that Brazil reported the lowest average balance outstanding per credit card from the above mentioned countries at $545 in 2015, behind Mexico ($799), Canada ($1,127) and the US ($1,191). At the same time, Brazil had the lowest share of credit card holders who revolve at least some part of their monthly balance from the above mentioned countries, at 24.5%. This suggests that despite the higher amounts outstanding, Brazilian consumers are highly concerned about the debt they hold and they are keen to repay their debts.
In 2015, the share of credit card holders who repaid the balance in full gained 10 percentage points to reach over 75%. This increasing level is largely explained by credit card issuers in Brazil normally charging very high interest rates, (e.g. Central Bank of Brazil reported interest rates on credit card debt to reach 482% in December 2016). Given the substantial revenue that can be earned from outstanding balances, it comes as no surprise that the majority of issuer revenue in Brazil comes from interest rates, in addition to interchange on purchase volumes.
In 2015, the share of credit card holders who repaid the balance in full gained 10 percentage points to reach over 75%