The financial health of Brazilian families reached a critical level in July. According to Serasa Experian, 78.2 million people are in debt, the highest number since 2016. The value of debts more than 90 days overdue reached R$482 billion, which means that 47.9% of the adult population is in default. The highest rates are in Amapá (64%), the Federal District (60.9%) and Rio de Janeiro (57%). Banks, credit card companies and finance companies account for almost 47% of these debts.

Recidivism is high: according to the National Association of Credit Bureaus (ANBC), 831,000,000 of the consumers who had been denied credit, i.e. had had their name removed from the regulatory agencies, in May had already been in the same situation in the previous 12 months. Of this total, 631,000,000 had been denied credit again and 201,000,000 had been regularized but owed again.

Financial fragility is also evident in families‘ cash flow. A study by fintech ’Klavi‘ shows that 35% spend all their income within 36 hours of receiving it, and 56% have less than R$100 available after that period. Another survey, by ’SalaryFits', reveals that 54% of formal workers are unable to close the month in the black, especially those from generation Z, class C, PJ workers and smaller companies. An additional factor is the growth of online sports betting, which increases indebtedness. Data from Mapfre Investimentos indicates that 57% of indebted individuals who started betting were not in default before this practice.

In order to pay off debts, 49% resort to extra credit, be it cards, overdrafts or loans, as well as seeking additional income as freelancers. With their budgets under pressure, consumers are becoming less loyal to brands and looking for more cost-effective products. Currently, cheaper brands are growing in value more than premium brands.