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Brazil--Where Credit Grows on Trees

From the Global Post.

"...Brazil, where even the poor can pull out the plastic to cart home flat-screen TVs, stereos and cappuccino machines.

Credit is not only bountiful but virtually free and democratic. It’s all thanks to interest-free payments — Brazil’s version of an installment plan. Only this plan allows consumers to buy their products in up to 17 installments or more on any credit card and without interest rates."

...

"Banks guarantee payment to stores and take on all the risk in case consumers miss a payment. Yet, stores, consumers and banks have a common understanding: missing a payment's due date will lead to painful interest rates, especially because Brazil's interest rates are among the highest in the world. And consumers recognize they're not always getting the best bang for their buck — stores often charge more for products sold under installment plans.

With customers eager to buy more products on credit, retailers want to make sure they keep their clients happy by stretching the installment plans as far as they can."

Let this be a warning to all potential Brazil investors--they will see the same kinds of trouble we're seeing now. Brazil is a bubble still forming, and I'd advise you to avoid getting caught in its Venus flytrap.

Posted by Cute at 7:21 PM

Labels: economy, financial (non-tax), taxes