Abusive Interest Rates: When Bank Profit Turns into Consumer Loss

The issue of abusive interest rates has been gaining increasing attention in Brazilian courts, especially at the Court of Justice of Piauí (TJPI), which has been taking a firm and exemplary stance against disproportionate and harmful banking practices affecting consumers.

Recently, the Piauí Court ruled on yet another emblematic case of banking abuse. A consumer who initially took out a payroll-deductible loan of R$ 6,000.00 (six thousand reais) saw their debt soar to R$ 16,038.00 (sixteen thousand and thirty-eight reais). In other words, in a short period, the debt more than doubled without any plausible justification. The TJPI, when analyzing the situation, was categorical in recognizing the illegality of the bank’s conduct, describing the amount as “harmful and disproportionate” and criticizing the financial institution's negligence in failing to provide clear information to the consumer.

What Does the Law Say?

The decision follows well-established precedent from the Superior Court of Justice (STJ), which reinforces the application of the Brazilian Consumer Defense Code (CDC) to financial institutions. This means that bank customers are entitled to clear, precise, and adequate information about the real cost of a loan. Charging abusive amounts and hiding the true extent of the debt is not just an ethical failure—it’s a direct violation of Brazilian law.

The Brazilian Civil Code (Law No. 10,406/2002) also condemns practices that breach good faith and contractual balance—principles that must guide all legal relationships, especially consumer relations.

The Contradictory Reality of Payroll-Deductible Loans

What is most concerning is that many of these abuses occur in payroll-deductible loan contracts, a credit modality that should offer consumers lower interest rates precisely because of the low risk of default. After all, banks have a guaranteed source of payment directly from the client’s salary, retirement benefit, or pension. This alone significantly reduces the financial institution’s risk.

So, the question remains: Why, even with this security, do banks impose such high interest rates? Why does the consumer end up paying more than double the original loan amount, often without understanding how the debt reached such disproportionate levels?

The Importance of Oversight and Consumer Awareness

The Judiciary has been fulfilling its role in curbing these practices, but consumers also need to stay alert to their rights. Before signing any loan agreement, it is essential to demand the full contract, carefully check the effective interest rates, and, if possible, consult a lawyer or a consumer protection agency.

When there is evidence of abusive practices, seeking legal advice as soon as possible is highly recommended. Experience shows that with the right legal action, it is possible to annul abusive clauses, reduce outstanding balances, and even obtain compensation for moral damages—as the TJPI has already decided in several cases.

Conclusion

Bank profits cannot come at the expense of fundamental consumer rights. The practice of abusive interest rates is not only immoral but also illegal. Decisions like the one from the Court of Justice of Piauí bring hope for a fairer, more balanced, and transparent financial market.

Dr. Antônio O’Brien Júnior, registered with the Brazilian Bar Association (OAB/PI 16650), a lawyer specialized in Civil Law and Consumer Law, is available to answer your questions and assist you with legal matters related to banking contracts, abusive interest rates, and other consumer protection issues.

If you would like more information or personalized legal assistance, you can schedule a consultation via email at antonio@aobjlaw.com or by phone/WhatsApp at +55 (86) 9 9988-9668.

References:

BRAZIL. Law No. 10,406, of January 10, 2002. Institutes the Civil Code. Official Gazette of the Union.

BRAZIL. Court of Justice of Piauí. Civil Appeal No. 2015.0001.000172-0 | Reporting Judge: Justice Fernando Carvalho Mendes. 1st Specialized Civil Chamber. Judgment Date: 08/28/2018.