Brazil's credit card interest cuts to begin in March

Brazil's finance minister Henrique Meirelles said on Thursday that the government-mandated cuts in credit card interest rates should start in late March.

The government's aim is to slash the annual interest charged on credit cards by half. Rates are currently well above 400%, by far the highest in Latin America. Meirelles said the deadline of late March gave plenty of time for banks and card companies to adapt to the measure.

"We anticipate that it will take about 90 days for the measures to begin to be implemented," Meirelles was quoted as saying by local magazine Exame, adding, "it will be in effect by the end of the first quarter. This is a viable amount of time as the conditions in the Brazilian economy are already quite different and the fiscal adjustment is already underway."

Meirelles said that Brazil's economy is already showing signs of recovery and the improvement will be even more visible in early 2017.

"This, along with certain regulatory measures we will take for credit cards, such as the unification of [debit and credit card] machines at points of sale, which has already been implemented, and a number of others, allows lower costs," the minister explained.

The banks and credit card companies are reportedly on board with the changes, as the central bank has spoken to them to emphasize the need for everyone to make an effort so Brazil can start growing again.

The president of Brazilian card industry association Abecs, Marcelo Noronha, said in a statement reported by local media that the sector has cooperated with the central bank to create a model that offers better credit card deadlines and rates, and reduces the drain on the income of consumers using the revolving credit line, which will help encourage conscious consumption in Brazil and increase financial education of the public.

According to a November study conducted by the Brazilian consumer protection association (Proteste), which compared credit card interest rates in Brazil and six other Latin American countries, the average rate charged in Brazil is 436% per year.

Data collected by the association of finance executives (Anefac) in December also indicated that credit card interest rates were at almost 460% per annum.