Credit card market grows 30.9% between 2019 and 2022

The debit balance refers to the purchase amount, whether paid in installments or not, that has not yet been paid by the customer and on which interest may apply. The data were released this Monday (29th) by BC and are included in one of the Banking Economy Reportwhich will be published in full on June 6.

According to the BC, there is a tendency towards the use of more expensive credit card modalities as the bonds increase, which are the number of card issuing institutions in which the customer has a debit balance.

“On average, from two bonds, the participation of modalities with credit characteristics, subject to interest charges (such as revolving credit), and the percentage of the limit used”, explained the BC. In total, 54% of customers had a debit balance at only one institution; 25% in two; and 20% on three or more.

“The more bonds, the greater the limit and the average debt balance. This signals, according to the study, that users who are using cards from more than one institution increase their spending capacity by increasing the additional limits, increasing, on average, the consolidated debt balance”, added the BC.

bank inclusion

The increase in numbers can be explained by the entry of new institutions into the market in recent years, mainly in the postpaid card segment, which meant that a significant portion of the Brazilian population now has access to one or more credit cards. Payment institutions and digital banks increased their user base by 27.6 million individuals in the analyzed period.

Also according to the document, in June 2022, the number of credit cards (190.8 million) represented almost twice the economically active population in Brazil (107.4 million), according to 2021 data from the Brazilian Institute of Geography and Statistics (IBGE) and the statistics of the Brazilian Payments System.

For the BC, the expansion of the credit card market is positive from the point of view of financial inclusion, but it has the potential to increase the level of household indebtedness. “When the customer fails to pay the full amount of the card bill, the unpaid amount becomes a type of loan, called a credit card revolving credit card. This is one of the credit operations with the highest default rates and cost in the market”, says the document.

Another highlight is the percentage of use of revolving and non-migrated revolving credit (amount that remains in the revolving credit system for more than 30 days, the maximum period foreseen, after the invoice has not been paid in full on the due date), between 17% and 20%, regardless of the number of users’ bonds, and the low migration of revolving credit, less than 5%.

limit use

Regarding the use of the card limit, the data reveal that the greater the number of bonds, the lower the percentage of users who commit practically the entire credit limit.

“The finding suggests that there is a greater margin for spending due to the limits offered by the additional cards. In addition, the study observed an increase in the average percentages of consumption of the limit as the user adds new bonds, signaling a greater propensity to consume for those who start using more cards”, says the BC.

Digital financial institutions were the group with the highest growth in the debt balance of their customers (292.3%), although large public banks continue to concentrate the largest share of the debt balance, R$ 57.7 million.

Regarding indebtedness with credit card operation characteristics, the highest percentage (between 39% and 57%, depending on the number of links) is from banks linked to companies in the retail sector that issue cards linked to their store networks. According to the BC, the data are in line with the performance profile of this group, “which has as a common practice the realization of personal loans with payment of the installments on the card invoice”.

“On the opposite side, there is the segment of cooperative banks and singular cooperatives, with a percentage of card use in modalities subject to interest charges much lower than the other groups”, added the agency.