government drops to 1.91% per month

The government lowered the ceiling on payroll loan interest to beneficiaries of the National Social Security Institute (INSS), which fell from 1.97% per month to 1.91%. Credit card hires were also impacted. The rate dropped from 2.89% to 2.83% per month.

The justification of the Minister of Social Security, Carlos Lupi, was the reduction of the Selic rate. On the 2nd, the Monetary Policy Committee (Copom) started the downward cycle, taking the basic rate from 13.75% to 13.25% per annum.

According to a survey by the Central Bank, 24 of the institutions accredited to operate payroll loans work with rates equal to or lower than 1.91% per year, including three of the five largest banks (Bradesco, Caixa and Santander).

Attempt to apply a penny to payroll interest failed in March

In March, a government move to lower the interest on payroll loans for retirees and pensioners, an attempt to reduce the cost of money “by force”, complicated the situation for those who needed credit.

On March 13, the National Social Security Council (CNPS) forced a reduction in the rate ceiling from 2.14% to 1.70% per month, but had to backtrack. The measure “dried up” the credit modality. At least ten institutions, including BB and Caixa, suspended the offer of payroll loans, with the argument that the new ceiling would make operations unfeasible.

The result was that, in the absence of this more affordable resource, many had to resort to emergency lines of credit, such as overdraft and revolving credit card. “It’s natural that the market withdraws at times like this, said Sílvio Campos Neto, economist and partner at Tendências Consultoria.

The solution to the problem took more than two weeks to come out. On March 28, the CNPS endorsed President Luiz Inácio Lula da Silva’s decision to set the interest rate ceiling at 1.97%.