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Brazil's Senate approves cap on overdraft, credit card interest

·1 min read

BRASILIA, Aug 7 (Reuters) - Brazil's Senate approved on Thursday evening a bill to limit interest rates charged on credit card debt and overdraft lines, a move aimed at helping consumers suffering the fallout from the COVID-19 pandemic, but that could weigh on banks' 2020 profit.

Lawmakers proposed a cap of 30% per year on debt rolled over on credit cards and overdraft lines for all loans extended by banks from March until the end of state of emergency declared by Brazil's government.

The current average interest rate for overdraft lines is 110% and for rolled-over credit card debt it stands at 300%.

Now Brazil's lower house will vote on the bill.

Shares in Brazil's biggest lenders, such as Banco Bradesco SA, Itau Unibanco Holding SA and Banco Santander Brasil SA, all dipped more than 1%, underperforming the country's stock exchange index, following the Senate's approval of the bill.

(Reporting by Maria Carolina Marcello Writing by Carolina Mandl Editing by Frances Kerry)