New Players Enter Brazil’s Credit Market, But Challenges Remain

São Paulo, Brazil - As the Brazilian economy continues to evolve, new players are emerging in the credit market. According to a recent study by Baillie Gifford and Plano CDE, an astonishing 73% of the population has at least one credit card, with 49% of entrepreneurs and 35% having savings.

Credit Card Usage

41% of Brazilians have two or more credit cards
32% of borrowers took out loans in the past year
The majority of these borrowers (68%) used both traditional and digital banks for their lending needs

Challenges to Financial Inclusion

Despite the growing availability of credit options, many Brazilians continue to struggle with financial inclusion. The study found that:

Half of all respondents had to borrow money in the last 12 months, often turning to family or friends as a first resort
Only 31% of borrowers surveyed said that they found the terms of their loans easy to understand

Obstacles to Financial Inclusion

The report highlights two major obstacles to financial inclusion:

Limited access to traditional banking services: Low-income individuals are more likely to seek loans from informal lenders, such as loan sharks
Lack of “slack” - or time to make thoughtful decisions: Scarcity can lead vulnerable populations to make poor financial choices and rely on quick, high-interest loans

Call to Action

As Brazil’s economy continues to grow, it is crucial that policymakers and financial institutions work together to address these challenges and create a more inclusive financial system. According to Baillie Gifford, “Inclusive financial solutions must be designed with simplicity and ease of use in mind. We need to create offers that are accessible to all, regardless of income or social class.”

Key Statistics

73% of Brazilians have at least one credit card
49% of entrepreneurs use credit cards
35% of respondents have savings
41% of Brazilians have two or more credit cards
32% of borrowers took out loans in the past year
Half of all respondents borrowed money from family or friends

Sources

“Scarcity: Why Having Too Little Means So Much” by Sendhil Mullainathan and Eldar Shafir
Baillie Gifford and Plano CDE’s 2022 report on financial inclusion in Brazil