Why are debt arrears increasing even with credit availability?
It is paradoxical, but the Debt arrears are increasing even with credit availability growing in Brazil.
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In 2025, despite the expansion of financing lines, the number of defaulters has been breaking historical records, in a context of high interest rates, persistent inflation and compromised family income.
The key to understanding this phenomenon lies in the combination of economic factors that directly affect consumers' ability to keep their bills up to date.
High interest rates, inflation and pressure on the family budget
The most direct consequence of the current scenario is the impact of high interest rates and inflation on family budgets.
The Selic rate, which remains at high levels to contain inflationary pressure, increases the cost of credit and the value of installments.
When inflation erodes real wages and fixed costs rise, there is less left over to pay off debts.
Furthermore, the most accessible lines of credit come with high fees, especially on credit card revolving credit and overdrafts.
The result is a cascade effect that makes it difficult to pay off debts, increasing payment delays and increasing default rates.
Economist Fabio Bentes, from CNC, points out that these are the main culprits behind the current rise in defaults.borainvestir.b3
Compromised income and growing debt
The decline in the average income of Brazilian families has been alarming.
Currently, around 30.4% of families have overdue accounts, the highest rate in the historical series of the Consumer Debt and Default Survey (Peic), according to data from August 2025.
This occurs while general debt rises and reaches 78.8% of households, reflecting a reality where the budget is overrun and income is stagnant in the face of inflation.
A detailed analysis shows that the average debt value has exceeded R$1,500, with a high concentration of defaulters in the 30-39 age group, reflecting the working class struggling to balance basic expenses and debts incurred.
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Credit quality and the challenge of financial education
Not all available credit is of good quality. Many families end up opting for options with unfavorable conditions, such as payroll loan with high interest rates or emergency personal loans, which penalize the budget in the medium term.
Furthermore, the lack of adequate financial education contributes to uncontrolled debt behavior.
There's a lack of planning, knowledge of total costs, and a realistic assessment of payment capacity. Families turn to credit as a quick solution, but poor management leads to more debt arrears.
Consequences for the market and financial institutions
The impact of this scenario isn't limited to households. In the financial market, rising defaults increase the risk for banks and credit institutions, which tend to tighten conditions, worsening the cycle.
According to IBEVAR, defaults on free credit lines are expected to continue to grow, with projections of up to 7,20% by October 2025, directly affecting consumption and retail.
This movement creates a snowball effect where companies, especially small and medium-sized ones, also face cash flow crises caused by the same phenomenon, further worsening the economic environment.
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Table: Default and debt indicators in 2025
| Indicator | Value (%) | Source |
|---|---|---|
| Families with overdue debts | 30,4 | CNC – September 2025 |
| Total household debt | 78,8 | CNC – September 2025 |
| Annual growth in default | 6.28 (May 2025) | CNDL/SPC Brazil |
| Total number of defaulters | 70.73 million | CNDL/SPC Brazil – May 2025 |
| Free credit line default projection | Up to 7.20 | IBEVAR/FIA Business School |
The legacy of recent crises and the weakened structure of the economy
The current situation reflects the legacy of the crises that marked the last decade. Between prolonged recession, the pandemic, and periods of high inflation, many families have been left financially fragile.
A lack of savings and security in the face of economic volatility makes consumers more vulnerable to new debts and delays.
The slow economic recovery and stagnant growth are compounded by the government's fiscal crisis, which limits investment in social policies and effective financial support programs.
The result is a country where the supply of credit increases, but the real payment capacity of families decreases, fueling the paradox of growing delay.
Read also: Current status of personal loan approval: criteria and rates in 2025
Strategies to avoid increasing debt arrears
In this scenario, it is up to consumers to take conscious measures to prevent debts from getting out of control.
The first step is to prioritize paying off debts with the highest interest rates, such as credit cards. Renegotiating terms and conditions directly with creditors can ease the monthly burden.
Financial education becomes essential for planning household expenses and the strategic use of credit.
Social and economic impacts of increased default
The rise in defaults has profound effects not only on consumers' lives, but also on the economy as a whole.
When people and businesses fail to pay their debts, cash flow decreases, affecting investment, production, and job creation.
This domino effect can slow economic growth and increase social inequality.
Therefore, understanding the phenomenon of why the Debt arrears are increasing even with credit availability is essential for managers, public policy makers and citizens.
A clever analogy to understand the scenario
The current moment can be imagined as trying to fill a leaky bucket.
The high water flow represents the new lines of credit available, but the holes in the bucket symbolize high interest rates and the impact of inflation, which "leak" families' payment potential, making it impossible to retain what comes in.
What to expect in the coming months?
Experts are already warning that default and debt levels are expected to remain high for the remainder of 2025, given the continued high interest rate policy and inflationary pressure.
The biggest concern is the growth in overdue debts that exceed 90 days, which pose even greater risks to the economic recovery.
The expectation is also that the new government credit programs, although well-intentioned, will have limited results if they are not accompanied by policies to reduce interest rates and strengthen financial education in the country.
Importance of financial education and planning
Access to credit should be seen as a strategic tool and not as a facilitator of immediate consumption.
Investing in personal finance knowledge is the key to preventing debt accumulation and default.
Organizations like the Brazilian Association of Financial Educators provide valuable resources to raise awareness, contributing to families' financial well-being.
Conclusion
The increase in Debt arrears are increasing even with credit availability is a multifaceted phenomenon that reflects Brazil's current economic difficulties.
High interest rates, inflation, wage stagnation and a lack of financial education form the combination that increases default rates.
For those seeking financial stability, it is crucial to understand the risks and act with caution, planning, and knowledge.
The challenge is great, but it is possible to overcome the situation with informed choices.
For more insights and reliable data on debt, consult the National Confederation of Commerce (CNC), a national reference in economic research. CNC – Debt Research.
Frequently Asked Questions (FAQ)
Why do debt arrears increase if credit is more available?
Despite greater availability, high interest rates and inflation erode income, making it difficult to keep up with payments.
How does the high Selic rate influence debt arrears?
It makes credit more expensive, increasing installments and interest, reducing families' ability to pay.
What types of debts have the greatest impact on late payments?
Credit cards and overdrafts have the highest interest rates and the highest number of late payments.
How to negotiate debts to avoid delays?
Contact your creditor to try to extend the payment terms or reduce interest rates before the delay occurs.
Does financial education really help avoid debt?
Yes, understanding credit income, expenses and costs is essential for effective control and planning.
Is there a forecast for an improvement in the economy to reduce defaults?
Analysts indicate that as long as high interest rates and inflation persist, the scenario is unlikely to change in the short term.
Where to look for help with financial organization?
Institutions such as the Central Bank and financial education associations offer free materials and consultancy.
