As Fernanda Castro waits in line to pay for a new blender at a store in a Sao Paulo shantytown, the hairdresser recounts horror stories of friends who fell into debt and struggled to get out, Reuters reported.
"I don't want that to happen to me," she said. "I avoid using the credit card now. I'm afraid of it."
After a spending spree in recent years, Brazilian consumers are acquiring more conservative habits. But in a hopeful sign for the economy, they are still pressing ahead with big-ticket purchases of TVs and living room sets by relying on a tactic that is still new to many - saving.
That was the picture that emerged from about 20 informal interviews that a Reuters reporter conducted recently while spending a day at the Paraisopolis branch of Casas Bahia, Brazil's No. 1 furniture and home appliances retailer.
Despite a recent economic slowdown, the store buzzed with eager shoppers as its speakers blasted Brazilian country music out onto a street in Sao Paulo's largest slum. Children were jumping on an imitation-leather sofa as their mother checked out an Android phone, while a family of six was excitedly shopping together for a new washing machine.
Many were members of Brazil's emerging middle class, which include the approximately 30 million people who escaped from poverty over the last decade. Yet as their stories illustrate, keeping shoppers in stores has become harder over the past year.
Consumer defaults in Brazil rose 15 percent in 2012, according to credit research company Serasa Experian. About one in every six households is now overleveraged, according to a recent report by Santander.
Castro can still shop, though, because her salary has nearly doubled in the past two years to 3,000 reais (998 pounds) a month. That has enabled her to put money aside, a relatively new habit in a country where a painful history of inflation, which only ended in 1994, long engendered a culture of spending paychecks as quickly as possible.
"I am saving a lot more to get what I want," Castro said.
That is why many economists believe Brazil's consumers still have room to spend more and support an economy that has otherwise stagnated in the past two years, as sectors like manufacturing struggle.
The more bullish analysts tend to see recent consumer debt woes as a painful but perhaps necessary step in Brazil's economic maturity, rather than a bubble that has burst. Read more.
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