Brazil has tried to tame credit card revolving debt — yet it remains at the center of household indebtedness. In recent years, regulators have introduced a series of measures to curb its excesses: limiting revolving balances to 30 days, forcing migration into installment plans, capping total interest charges, and improving billing transparency. None of this was trivial. Still, the latest Central Bank Financial Citizenship Report delivers a clear message: more than half of credit card users carry interest-bearing debt — some 52.8 million people. The country’s main payment instrument remains, at the same time, its main channel of indebtedness.
The starting point helps explain the impasse. Revolving credit was never designed as a long-term product. It emerged in the 1990s as a short-term buffer — allowing consumers to pay a minimum amount on their bill and finance the remainder temporarily. It worked as a liquidity bridge. Over time, however, it evolved into something else: a recurring refinancing mechanism, especially when combined with installment plans and continued spending. Recent regulation attempted to restore its original function — limiting its duration and pushing borrowers into supposedly cheaper alternatives. But the flow that leads consumers into revolving debt has remained largely unchanged.
The data suggest this is not a marginal issue — it is structural. Credit card usage has expanded rapidly, with more than 37 million new users entering the system over four years, many with limited experience managing complex financial products. At the same time, the weight of card spending on household budgets increased sharply: the share of income committed to card expenses rose from 38.5% to 54% between 2020 and 2024. More importantly, the share tied to interest-bearing debt doubled over the period. Financial inclusion expanded — but a growing portion of users migrated toward the most expensive forms of credit.
The mechanics behind this process are simple — and persistent. When a consumer does not pay the full balance, the remaining amount enters revolving credit, typically at double-digit monthly interest rates. After 30 days, regulation requires banks to convert this balance into an installment plan — still costly, though somewhat less extreme. The critical point lies in what happens next. The card remains active, new purchases are made, and when the next bill cannot be fully paid, the cycle repeats. The result is not continuous use of revolving credit, but repeated returns to it.
A simple example illustrates the dynamic. A $10,000 balance in revolving credit, at roughly 15% monthly interest, can rise to about $11,500 in just 30 days. That amount is then converted into an installment plan, still carrying elevated costs. If the consumer continues to use the card and cannot fully settle the next bill, part of the new balance falls back into revolving credit. What emerges is not a single debt, but overlapping cycles of borrowing.
The distribution of this risk is far from neutral. Women, younger consumers, and lower-income households show higher levels of income committed to credit card debt. Those who depend most on credit tend to face the highest borrowing costs. In this context, revolving credit acts as an amplifier of inequality.
Why, then, have recent measures failed to solve the problem? Because they targeted the stock of debt, not the flow that generates it. Limiting time in revolving credit or capping total interest reduces extreme outcomes, but does not prevent millions from entering it month after month. The combination of constrained income, widespread card usage, and easy access to credit keeps the mechanism intact. The system corrects excesses — but preserves the engine of indebtedness.
Is there a solution? Possibly — but it is structural rather than purely regulatory. It requires expanding access to cheaper forms of credit before consumers fall into revolving balances, redesigning billing architecture so that full payment becomes the default rather than merely an option, and ultimately reducing reliance on credit as a substitute for income. Without these changes, any adjustment is likely to remain partial.