Banks criticize project that limits credit card revolving

The Brazilian Federation of Banks (Febraban) criticized the proposal to establish a limit for interest on revolving credit, claiming that this could reduce the supply of credit in the country. The project was approved this Tuesday (5) by the Chamber of Deputies and is going to be analyzed by the Senate.

The entity that brings together Brazilian banks expressed concern about “artificial interest limits”, stating that they can make credit unsustainable and negatively affect the market.

“In the case of credit cards, a product that accounts for 40% of all consumption in Brazil and 21% of GDP, ceilings on revolving interest rates can make a relevant portion of credit cards economically unfeasible, affecting the availability of credit in the country. economy,” he said in a note to People’s Gazette.

The project approved by the deputies limits to 100% the interest of the revolving credit and the installment of card invoices if a solution agreed between the sector and the government is not found in 90 days. In July, interest rates on the revolving credit were at 446% per annum.

Febraban recognized the efforts of the project’s rapporteur, Deputy Alencar Santana (PT-SP), in granting a period of 90 days for technical discussions involving the card industry, the National Monetary Council and the Central Bank.

The entity expressed confidence that this period will be enough to find a solution that allows for an evolution in the market, seeking to better distribute the credit risk and eliminate crossed subsidies in the credit card sector, so as not to cause ruptures in the market.

“The card industry, together with the government and the regulator, will succeed in driving material credit card developments. In this sense, Febraban will pursue a path that dilutes the credit risk between the links in the chain and eliminates cross-subsidies, in a seamless transition of the credit card product and how it is financed”, added the entity.

In the context of discussions on revolving credit, banks argue that the high interest rates are due to the financing of interest-free purchases in installments on the credit card, while independent vending machine companies and fintechs disagree with this explanation. Last week, President Luiz Inácio Lula da Silva (PT) criticized the interest charged on the revolving credit and said that the value is high due to the “default” that is already foreseen by the banks even before the credit is granted.

“They throw the debt of good deadbeats on the shoulders of good payers. We pay for those who don’t,” he said.