Brazil's Payroll Loan Portability: A Win for Workers?

Brazil's New Loan Portability Law: Lower Interest Rates for Millions? Brazil's Ministry of Labor announced a significant change to the country's financial landscape on June 6th, 2025. Private sector employees with signed contracts can now easily switch banks for their payroll-deducted loans. This development aims to benefit workers with older loans that carry higher interest rates. According to the Ministry, "The objective is to benefit holders of old payroll-deducted loan contracts, closed before the authorization to offer FGTS as collateral, which, in theory, have higher interest rates." The process, however, requires workers to actively seek out new banks, as the online system facilitating this change is not yet functional. The original loan provider will be able to match or beat offers from other institutions. This change is expected to improve the financial well-being of many Brazilian workers by providing access to more competitive loan terms. The ease of switching loans is expected to increase competition among banks, leading to a more favorable market for consumers.