Jobs Are Plenty, Bills Are Past Due: Inside Brazil’s Debt Squeeze

Brazil is living two stories at once. Unemployment is at a 13-year low, real wages are at record levels, and inequality across major metropolitan areas has eased.

Yet a record share of families say they’re behind on bills—and many can’t see a way out. Both can be true at the same time. Start with the strain. In September, 30.5% of households reported being in arrears—the highest since the consumer debt survey began in 2010.

Overall indebtedness rose to 79.2%. A record 13% said they do not have the means to clear overdue balances. Nearly half of delinquent families (48.7%) are more than 90 days late, and 18.8% report that over half of their monthly income goes to debt service.

Now the seemingly good news. In the quarter to August, Brazil’s jobless rate fell to about 5.6%, the lowest in more than a decade. Real average earnings reached roughly R$3,484 per month, also a record.

And new research on Brazil’s metropolitan regions shows the income Gini index falling to around 0.53 in 2024—the lowest in the data series—meaning the wage ladder narrowed a bit.

Here’s how those facts fit together. Borrowing costs are exceptionally high: the central bank’s policy rate is 15% and consumer credit remains punishing, with revolving credit-card charges running in the hundreds of percent annually.

Rising Debt Burdens Threaten Spending and Growth

A new legal cap limits how much future revolving balances can snowball, but it doesn’t cut the interest rate and doesn’t fix older debts that already rolled over.

Many households took on expensive credit when inflation was higher; wage gains arrived later and are uneven across sectors.

Lower-income families led the latest rise in indebtedness, while higher-income households posted the sharpest annual increase in those saying they cannot pay—evidence the squeeze is broadening.

Why this matters—plainly: More paychecks are going to interest, not purchases. That dents retail sales, discourages hiring, and makes banks tighten credit—risking a loop that blunts the benefits of a strong labor market.

What to watch next: whether rates start to fall, whether wage gains persist in lower-paid sectors, and whether debt-workout efforts meaningfully reduce past-due balances.