The Role of Nu Holdings (BVMF: ROXO34) in the Financial Vulnerability of Brazilian Families and Marginalized Groups

Introduction

Financial inclusion has been a central theme in the expansion of digital banking services in Brazil, with institutions such as Nubank (Nu Holdings BDR, BVMF: ROXO34) positioning themselves as facilitators of credit access, particularly for marginalized communities such as low-income families and LGBTQIAPN+ individuals. However, despite its strong market presence and customer-centric branding, Nubank has been adopting credit practices that contribute to financial vulnerability rather than sustainability. This paper examines how Nubank’s credit card policies—particularly its high-interest restructuring of overdue balances—create a non-sustainable cycle of debt, disproportionately impacting financially vulnerable populations. By contrasting these practices with competitors such as C6 Bank and Santander, which offer more flexible refinancing terms, this study highlights the need for greater transparency and regulatory oversight in digital banking.

Nubank’s Credit Policies and the Cycle of Debt

Nubank offers credit cards to a broad spectrum of consumers, including individuals with lower credit scores who may have difficulty accessing traditional banking services. While this increases financial inclusion, the structure of Nubank’s overdue bill payments creates a scenario where debt quickly escalates beyond manageable levels.

When a consumer fails to pay their full credit card bill on time, Nubank only provides two options: full payment of the overdue balance or a renegotiation that slices the debt into fixed installments with an interest rate of up to 11% per month. This fixed-rate model means that a relatively small overdue balance—such as R$950—can turn into a much larger long-term financial burden when split into five or six installments, significantly increasing the total amount repaid.

In contrast, competitors such as C6 Bank and Santander offer alternative refinancing solutions, including loans with lower interest rates (typically between 1% and 2% per month) to settle overdue balances. These alternatives allow consumers to consolidate their debt into a single, more manageable payment, reducing financial stress and preventing excessive accumulation of interest.

Misleading Perceptions and Lack of Transparency

Another key issue with Nubank’s credit practices is the way in which its renegotiation system is presented to consumers. While the bank promotes its installment options as a form of financial relief, it does not fully clarify that these agreements do not consolidate future bills. Consumers are often led to believe that they are obtaining a loan to cover all outstanding balances, when in reality, they are merely splitting overdue payments while remaining responsible for upcoming charges separately. This creates a misleading perception of financial relief while keeping users trapped in a cycle of repeated borrowing.

For individuals who rely on credit cards to manage essential expenses—such as rent, food, and healthcare—this system can be particularly harmful. Many low-income and marginalized individuals, including LGBTQIAPN+ consumers who face systemic barriers to economic stability, end up using Nubank’s credit products as a last resort for survival. The lack of clear communication regarding debt restructuring further exacerbates their vulnerability, leading to prolonged financial distress.

Comparison with Market Practices

While high-interest credit card debt is a common issue in Brazil, Nubank’s approach diverges significantly from industry best practices. Traditional banks and fintech competitors often provide a range of refinancing options that allow consumers to restructure their debt under more sustainable conditions.

• C6 Bank and Santander offer loan agreements to settle overdue credit card balances, with significantly lower interest rates (1%-2% per month) compared to Nubank’s 11% fixed rate.

• Other financial institutions frequently allow customers to consolidate multiple outstanding balances into a single loan, reducing confusion and preventing the accumulation of parallel debts.

• Nubank’s approach prioritizes short-term revenue generation through high interest rates while marketing itself as a consumer-friendly financial institution.

These differences highlight the need for increased scrutiny of Nubank’s lending practices. While the bank has successfully positioned itself as an accessible and innovative financial solution, its policies ultimately place many consumers—particularly those from vulnerable socioeconomic backgrounds—into long-term financial hardship.

Conclusion

Nubank’s rapid expansion in Brazil’s digital banking sector has provided millions with access to credit. However, its credit card renegotiation practices create an unsustainable cycle of debt that disproportionately affects financially vulnerable populations, including low-income families and LGBTQIAPN+ individuals. By enforcing high fixed-interest rates on overdue balances and failing to consolidate debts transparently, Nubank fosters long-term financial instability rather than economic empowerment.

The contrast with institutions such as C6 Bank and Santander, which offer more sustainable refinancing options, underscores the need for greater regulatory oversight and transparency in digital banking. If Nubank is to continue branding itself as an agent of financial inclusion, it must reconsider its debt policies and adopt fairer, more consumer-friendly credit solutions. Otherwise, its current model risks perpetuating financial hardship under the guise of accessibility.

C6 Bank agreement for all debts in credit card, splited or not.

Pratices of NuBank