Brazil's Central Bank president, Gabriel Galípolo, warned on Monday (24) about the growth of expensive, unsecured credit lines at a time of high household indebtedness. According to G1, the recent rise in debt has been driven mainly by credit used for consumption and fixed expenses, a trend that concerns the monetary authority. He spoke at the opening of Febraban Tech 2026, a financial technology event held by Febraban, the federation of Brazilian banks.
According to Valor Econômico, Galípolo said it was not the high benchmark interest rate, now at 14.75% a year, that caused households' over-indebtedness, but the expansion of credit supply, fueled in part by official credit policy. The remark answers sectors of the government and the ruling Workers' Party that blame the Central Bank's monetary tightening for the strain on family budgets despite low unemployment and real wage gains. In his view, the relationship works the other way: when the Selic rate is lower, indebtedness grows; when rates are high, credit slows. He presented a chart linking the rise in indebtedness from 2020 to the banking inclusion spurred by Pix, the instant payment system run by the Central Bank, to historically low rates and to credit support programs created in the pandemic and kept in the following years. "You cannot be happy because credit grew and then complain that indebtedness grew," he summed up.
Indebtedness kept rising even as the labor market improved. In June, unemployment fell to 5.4%, the lowest level for the period, and in May households' disposable income hit a record R$ 822 billion, according to G1. Galípolo also displayed an excerpt of the Monetary Policy Report attributing the recent increase to non-earmarked credit, with rising arrears in vehicle financing, non-payroll personal loans and private payroll-deducted credit. Created for formally employed workers, the payroll loan known as consignado CLT, with installments deducted straight from wages, was the biggest recent driver of household credit: since its launch in March 2025, the outstanding balance jumped from R$ 41 billion to R$ 102 billion.
For Galípolo, the concern goes beyond the size of the debt and reaches the type of credit contracted, as G1 reported:
"Not every kind of indebtedness is a problem. Buying a house, for example, creates an asset. The problem is when debt is used for something that does not turn into an asset, especially when it involves high interest rates."
Credit cards under scrutiny
Galípolo also defended regulatory changes to correct incentives that, in his assessment, allowed credit card operations to grow too fast. The data presented at the event show that 37 million Brazilians started using credit cards between 2020 and 2024. Over the same period, users carrying interest-bearing debt rose from 34 million to 52.8 million, the share of income committed to cards went from 38.5% to 54%, and default jumped from 55% to 64.5%. According to Valor, the Central Bank is reviewing card rules to promote responsible lending and fix distortions in a model where long payment terms for full-payment purchases and interest-free installments benefit high-income clients, while the costs are passed on through higher interest to low-income families. He gave no details, but mentioned macroprudential tools and international experience.
At the same event, the Central Bank chief celebrated Brazilians' high trust in Pix, shown in a Quaest poll cited at the presentation: 80% say they trust the payment system, ahead of the Catholic Church (76%) and the Armed Forces (70%), while 70% say they trust their own spouse. "First place as an institution... and the spouse in fifth. That worries me," he joked. According to a Central Bank study, Pix is already used by 148 million individuals, equivalent to 86% of the adult population, and by 12.8 million companies.