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An unprecedented study by the National Association of Credit Bureaus shows that 32% of Generation Z and 40% of millennials are in default in Brazil

São Paulo, January 31, 2019 - Default, which affects more than 60 million Brazilians, is one of the country's biggest problems. This situation of non-payment of financial commitments is even more alarming for younger generations, who already enter the consumer market with a high level of debt. 

This is the finding of an unprecedented study carried out by ANBC (National Association of Credit Bureaus), which found that 32% of Generation Z, the age group between zero and 21 with a total population of 13.8 million, are in default. In absolute numbers, there are 4.4 million in debt. Also according to the survey, which was based on data from the IBGE (Brazilian Institute of Geography and Statistics), the average amount of debt is R$ 1,676.00.

The situation is even worse among the next generation, the so-called millennials, an age group of 51.5 million people between 22 and 37 years old. The percentage of indebted people is 40%, or 20.6 million, with an average debt of R$ 3,737.00, more than double the average ticket presented by generation Z.

There are 25 million people in these two generations alone, which represent the country's young population. This means that for every ten Brazilians in debt, four belong to generations Z and millennials.  

In the opinion of Elias Sfeir, president of ANBC, there are several factors that explain this situation. “The lack of financial education and savings mentality is common to all generations and encourages default,” he says, adding that, “for younger people, the scarcity of jobs and the difficulty of access to education aggravate the default scenario.” Sfeir notes that consumerism must be taken into account in this analysis. “Items such as sneakers, cell phones and notebooks are constantly being exchanged for the latest model. There is no budget that can withstand so much spending. This compulsive and irrational buying behavior is stronger among young people,” he says.

And the scenario, in terms of debt, tends to get worse. “The members of these younger generations, in general, haven't started a family yet and therefore haven't suffered the pressure of having a series of additional burdens to bear on a daily basis, such as house maintenance, children's education and health insurance,” adds Sfeir.

These monthly obligations to dependents are the factors that weigh heavily on the default of the next generation, X, which comprises people between the ages of 38 and 53. X is the group with the highest percentage of debt and the highest average ticket. Made up of 44.6 million Brazilians, this group has 42% in debt, or 18.6 million people, and an average debt of R$ 5,351.00.

From the age of 54, the survey shows a reduction in the level of default, which is now 34%. This group, which goes up to the age of 72, with 31.9 million people and 10.9 million defaulters, has an average debt of R$ 5,418.00. A large part of the default rate in this group can be explained by the fact that people who often have a guaranteed income from their pensions are forced to help out other family members, such as children and grandchildren, who are struggling to find a regular job and a fixed monthly income.

It's only after the age of 72 that the average ticket begins to fall, reaching R$ 3,824.00 in the 72 to 89 age group, made up of 8.5 million people, of whom 2.9 million or 34% are in default. From the age of 90, the average debt is R$ 2,721.00, which is still a reflection of the need to help other family members financially with their pensions. This older generation, aged over 90, is made up of around 732,000 people, 247,000 of whom are in debt, with an average ticket of R$ 2,721.00.

“These figures show how much the economic scenario has influenced delinquency, but they also indicate the importance of adopting structural measures to reduce the cost of credit, such as the approval of the Positive Registry currently being voted on in Congress, and the inclusion of financial education in the curricula of the various levels of education,” concludes Sfeir.

ANBC Press Relations

Regina Pimenta: (11) 98136.6835 regina@pimenta.com

Ana Carolina Rodrigues: (11) 98674.0348 anacarolina@pimenta.com