This one is a (time) bomb. Exame magazine wrote an article about the credit card default fears in Brazil, giving hints on the “blow up” timeline: January 2012. From Google Translate: 
Banks in Brazil are worried about their credit card loans. Among the main banking institutions, all eyes are on the new banking rule that forces consumers to increase the minimum credit card payment of 15% to 20% of the bill, starting in December. This policy will hit hard the budget of the customers who ignore economists recommendations and insist in rolling most of their debt into the next month. The fear is particularly aimed at January 2012, when all year-end purchases (holidays shopping, plus education tuitions, supplies and taxes) come together at the same time.
For many months, the credit card issue has occupied the main agenda of large banks’ executives. Few years ago the plan was to gain credit card market share in the boom caused by the entry of new customers into the middle class. And the process gained strong momentum in the 2008 crisis, when banks put armies of sales reps in the street to attract new consumers.
The concern now is that with the economy slowing down, defaults will soar.
Last year, however, the yellow light went on. At banks and also the Central Bank, the fear was that the industry exuberance, which was growing at Chinese rates, could quickly turn into a massive default.

In the mean time, some executives became scared: an official research requested by the banks showed that many customers, especially those with lower incomes, believed that the minimum credit card payment payed off the debt. The government became concerned and called off the whole credit card industry to organize the mess.
Within this reorganization, everyone is expecting the most difficult stage. “We are preparing. It will be a delicate moment because the consumer will have to pay more for a large shopping bill in December. The budget is already usually tight in the beginning of the year. Many will have problems,” says a director of a large retail bank.

Full article here

Share →