Interest Rates
Interest rates vary widely. Some credit card loans are secured by real estate, and can be as low as 6 to 12% in the U.S. (2005). Typical credit cards have interest rates between 7 and 36% in the U.S., depending largely upon the bank's risk evaluation methods and the borrower's credit history. Brazil has much higher interest rates, about 50% over that of most developing countries, which average about 200% (Economist, May 2006). A Brazilian bank-issued Visa or MasterCard to a new account holder can have annual interest as high as 240% even though inflation seems u per annum (Economist, May 2006). Banco do Brasil offered its new checking account holders Visa and MasterCard credit accounts for 192% annual interest, with somewhat lower interest rates reserved for people with dependable income and assets (July 2005). These high-interest accounts typically offer very low credit limits (US$40 to $400). They also often offer a grace period with no interest until the due date, which makes them more popular for use as liquidity accounts, which means that the majority of consumers use them only for convenience to make purchases within the monthly budget, and then (usually) pay them off in full each month.
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