Credit card interest rates fall in February

For the second month in a row, the average interest rate on revolving credit cards was reduced for families, going from 419.3% per year in January to 412.5% ​​per year in February this year. The drop is 6.8 percentage points in the month and 7.9 percentage points in 12 months. The data is in the Monetary and Credit Statistics released this Tuesday (2) by the Central Bank (BC).

Revolving credit lasts 30 days and is the one taken by the consumer when they pay less than the full amount of the card bill. In other words, you take out a loan and start paying interest on the amount you were unable to repay.

The modality has the highest rates on the market. But, in January of this year, the law came into force that limits revolving interest to 100% of the debt value, and not more than 400% per year as currently charged. The measure, however, only applies to new financing, which is why the statistics are still at high levels.

After 30 days, financial institutions pay the credit card debt in installments. In the case of the installment card, interest reduced by 3.3 percentage points in the month and 7.3 percentage points in 12 months, to 184.5% per year.

The interest rates charged on credit card transactions were those that most influenced the drop in the average interest rate charged to families in February. On the other hand, interest on special checks increased by 6 percentage points in the month and decreased by 2.9 percentage points in 12 months (131.8% per year).

Considering all types of credit with free resources to individuals, the average interest rate reached 52.5% per year, with a monthly decrease of 0.1 percentage points and 6.0 percentage points in 12 months.

In operations with companies, the average rate reached 21.4% per year, a monthly decline of 0.9 percentage points and 2.4 percentage points in relation to the same period of the previous year. Basically, the monthly drops in the average rates for discounts on trade bills and other receivables (1 percentage point), working capital with a term of more than 365 days (0.7 percentage point) and revolving credit card (38 percentage points) contributed to this result. .3 percentage points).

Average rates

In total credit with free resources, considering individuals and legal entities, the average interest rate reached 40.2% per year in February, with decreases of 0.3 percentage points in the month and 3.8 percentage points in 12 months. “The reduction in the month was mainly the result of the effective reduction in interest rates (rate effect), with a small opposite effect on the composition of the portfolio (balance effect)”, explained the BC.

In free credit, banks have the autonomy to lend money raised in the market and define the interest rates charged to customers. In targeted credit, the rules are defined by the government, and are basically intended for the housing, rural, infrastructure and microcredit sectors.

In the case of targeted credit, the average rate for individuals was 9.4% per year in February, a reduction of 0.3 percentage points in the month and 0.8 percentage points in 12 months. For companies, the rate fell 0.3 percentage points in the month and 1 percentage point in 12 months, to 12.2% per year.

As a result, the average interest rate on credit concessions continues to slow down and reached 27.8% per year in February, a reduction of 0.4 percentage points in the month and 3.3 percentage points in 12 months. The peak in interest rates occurred in May last year, when it reached 32.3% per year.

The behavior of average bank interest rates occurs at a time when the economy’s basic interest rate, the Selic, has also been reduced. The Selic is the BC’s main instrument for controlling inflation and, with the fall in prices, the BC has already cut the Selic six consecutive times, defined at 10.75% per year by the Monetary Policy Committee (Copom).

From March 2021 to August 2022, the Copom raised the Selic rate 12 consecutive times, in a cycle of monetary tightening that began amid rising food, energy and fuel prices. For one year, from August 2022 to August 2023, the rate was maintained at 13.75% per year, seven times in a row, to contain heated demand.

Before the start of the rising cycle, the Selic had been reduced to 2% per year, at the lowest level in the historical series that began in 1986. Due to the economic contraction generated by the covid-19 pandemic, the Central Bank had lowered the rate to stimulate production and consumption. The rate was at the lowest level in history from August 2020 to March 2021.

Wallet balance

The volume of credit operations in the National Financial System (SFN) reached R$501.6 billion in February, a decrease of 0.3% in the month and an increase of 5.3% in 12 months.

The stock of all loans granted by banks was R$5.796 trillion, an increase of 0.2% compared to January and 8% in 12 months. This performance resulted from a 0.2% decrease in the stock of credit to companies, which totaled R$2.218 trillion, in contrast to a 0.5% increase in that allocated to families, R$3.578 trillion.

The balance of credit extended to the non-financial sector, which is the credit available to companies, families and governments, regardless of the source (banking, bond market or external debt), reached R$ 16.342 trillion, an increase of 1.2% in the month. The main factor behind the monthly increase was the 2.5% increase in the balance of public debt securities.

In the interannual comparison, expanded credit grew 9.5%, prevailing the increases in the SFN loan portfolio (7.8%), public debt securities (12.4%), private debt securities (13.4 %) and securitized debt securities (26.9%).

Family debt

According to the Central Bank, default rates – considered delays of more than 90 days – have remained stable for a long time, with small fluctuations and registered 3.3% in February. In operations for individuals, it is 3.7%, and for legal entities it is 2.6%.

Household indebtedness – the relationship between debt balance and accumulated income over 12 months – stood at 48% in January, an increase of 0.2 percentage points in the month and a drop of 0.9% in 12 months. Excluding real estate financing, which takes a considerable amount of income, debt was 30.2% in the first month of the year.

Income commitment – ​​the relationship between the average value for paying debts and the average income calculated in the period – was 25.8% in January, an increase of 0.1 percentage point at the end of the month and a reduction of 0.8% in 12 months.

The last two indicators are presented with a greater lag from the month of publication, as the Central Bank uses data from the National Household Sample Survey (Pnad), from the Brazilian Institute of Geography and Statistics (IBGE).

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