The Central Bank of Brazil reported interest rates on credit card debt in the country climbed another 10% in September to a mind-blowing 414% per year, according to Xinhua.
This means someone who has just racked up 3864.15 real ($US1,000) in credit card debt that cannot be paid back immediately will accrue interest of 12,604.16 real ($US3261.82) in a year.
Now, if you were going to pay this down in a year, each payment would come out to 1377.60 real ($US355.13) per month, or 16,468.31 real ($US4261.82) over the course that year. Here’s what the payment breakdown looks like in dollar terms. After your third month, you have already paid more interest 3959.14 reals ($US1023.31) than the entire principal.
The outrageous interest rate is only part of the problem Brazilians face as they have seen their purchasing power crippled by a sharp drop in their currency, the real. Since the beginning of September 2014, the real has lost about 72% of its purchasing power versus the US dollar.