Lula targets credit card limits as revolving debt hits record highs
President Lula proposes restricting Brazilians to one credit card each as revolving credit card debt reaches a record R$ 311 billion.
Brazilian President Luiz Inácio Lula da Silva has announced that his administration is discussing a drastic consumer finance regulation with the Central Bank: prohibiting financial institutions from issuing more than one credit card per person. The proposal, revealed during an interview on the Flow Podcast on October 1, 2026, aims to curb the country’s spiraling household debt crisis, which the president characterized as highly irresponsible.
The political push comes as the use of revolving credit card debt—known locally as the rotativo—reaches unprecedented levels. According to data released by the Banco Central, Brazilians accumulated a record R$ 311 billion in revolving debt during the first eight months of 2026, up from R$ 266 billion in the same period of 2025. The rotativo is triggered automatically when a cardholder fails to pay their monthly statement in full, exposing them to the most expensive credit line in the Brazilian financial system.
Average interest rates on this revolving debt reached an astronomical 449.4% per year in August 2026. Despite a legal cap implemented in early 2026 that prevents a consumer’s total credit card debt from exceeding double the original principal, the compounding interest continues to trap millions of families in severe financial distress. Lula criticized retail banks and fintechs for aggressively distributing unsolicited cards, arguing that easy access to multiple lines of credit is fueling a national debt trap.
The Battle Over Consumer Wallets
For the average Brazilian, credit cards are not just a convenience but a vital budgeting tool. Because of the widespread practice of interest-free monthly installments (parcelamento), many consumers juggle multiple cards from traditional banks and digital fintechs to stretch their purchasing power. Central Bank data from previous financial citizenship reports indicates that the average Brazilian holds more than six distinct financial relationships, many of which are digital credit accounts.
Limiting citizens to a single card would mark a fundamental shift in Brazil's highly competitive retail banking landscape. While consumer advocacy groups welcome measures to prevent predatory lending, financial analysts warn that a hard limit could restrict consumer choice and heavily impact the transactional revenues of digital banks. The proposal is currently in the discussion phase between the presidency and the Central Bank, now led by Gabriel Galípolo, and would require formal regulatory frameworks or legislative approval to take effect.
What it touches
A regulatory restriction on credit card issuance would directly impact Brazil's major financial institutions and highly valued fintech platforms. Major retail lenders like Itaú Unibanco (ITUB4) and digital-first competitors are highly exposed, as credit card transaction fees and interest from revolving lines represent a significant portion of their consumer banking revenues.