Indebtedness reaches 80% of families and breaks third consecutive record

Household indebtedness continues to grow in Brazil and reached a new unprecedented level in September. According to a survey by the CNC (National Confederation of Commerce in Goods, Services and Tourism) released this Monday (10), 79.3% of households have debts due – the third consecutive record.

The 0.3% increase in relation to August was driven by lower-income consumers. While the level remained stable among those earning more than ten minimum wages (more than R$ 12,120), indebtedness grew by 0.4 percentage point among families with a monthly income of less than ten minimum wages. In this group, 80.3% say they have overdue debts.

This is also the first time — since the survey began in 2010 — that the proportion of indebted people among the lowest income bracket exceeds the 80% mark.

The survey considers families who report having debts due on post-dated checks, credit cards, overdrafts, store books, payroll loans, personal loans, in addition to car and house payments.

According to CNC, the problem affects women more than men. Between August and September, indebtedness advanced 0.9 percentage point in the female group (they were 80%, now they are 80.9%), while there was a slight drop in the male group (from 78.3% to 78.2%).

Currently, women are more indebted on credit cards and overdrafts. Among men, the modalities of personal credit, store booklets, financing and payroll loans prevail.

Although the number of households in debt continues to grow month by month, the CNC report highlights that the pace has been slowing. The 0.3 percentage point increase from August, for example, is the smallest since April 2022.

“It is possible to verify that the gradual improvement of the job market, the income transfer policies and the drop in inflation in the last two months are factors that generate greater availability of income for families”, observes, in a note, José Roberto Tadros, president of CNC.

Bad debt also hits record in Brazil

If indebtedness shows signs of slowing down, defaults maintain a high pace of growth. In September, the volume of consumers who delayed the payment of debts reached 30%, the highest since the beginning of the historical series.

This is the third consecutive record for the index, which increased 0.4 percentage points from the previous month.

In an economic scenario marked by high interest rates, the debts already contracted make it more expensive and squeeze the budget of families, especially those with lower incomes.

Interest rates on credit lines for individuals grew 13.5 pp in one year, according to Central Bank data, reaching an average of 53.9%, the highest rate since April 2018.

“Although delays have grown in the month and in the year among consumers in both income groups, the difficulties of paying all the month’s commitments are more latent among lower-income families”, analyzes, in a note, Izis Ferreira, economist from CNC.

Household debt enters the electoral debate

With so many Brazilian families in debt and unable to afford the commitments, the issue has been gaining centrality in the dispute between Jair Bolsonaro (PL) and Luiz Inácio Lula da Silva (PT) for the Presidency.

In the first round, the PT candidate proposed a renegotiation through public banks and incentives for private institutions to offer adequate conditions to debtors.

Recently, Lula still accepted Ciro’s proposal that foresees zero debts of the SPC. The incorporation of the theme was placed as one of the conditions for the PDT to support the candidate in the second round.

The situation of the indebted was not a concern of the Bolsonaro campaign during the first round: the government program filed with the TSE (Superior Electoral Court) does not mention household indebtedness, default or household debt.

However, last week, the president announced as a novelty a Caixa Econômica Federal program that forgives up to 90% of the bank’s customer debts, rehashing an initiative that has been in existence since 2019.