Credit-card debt may threaten Brazil's boom

[naaman fletcher]

Brazilian leaders have praised newly empowered consumers like Xavier as drivers of the nation's economic rise. Their spending helped the country emerge from the global economic crisis at a time when people in other countries pulled back.

Now some economists fear those same consumers are being buried by sky-high lending rates. They worry that if debt erodes middle-class buying power, Brazil could face a recession.

The interest rate on credit cards in Brazil's financial hub of Sao Paulo averages 238 percent, according to a study conducted earlier this year by Fecomercio, a federation of commerce. That means carrying a balance of $1,000 for a year results in a $3,380 tab. That cost is expected to rise, with the Central Bank of Brazil likely to raise interest rates to battle inflation.

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