Buenos Aires, Argentina – “On the 10th or 15th of every month, I usually have to borrow money to buy groceries and pay basic expenses,” says Victoria Ferreira, 33, an Argentinian who works for a multinational company. She is one of thousands of people suffering from rapidly rising household debt arrears.
According to the latest data from the Central Bank of Argentina (BCRA), the bank loan delinquency rate in March reached 11.5%, and the digital wallet (fintech credit) delinquency rate reached 30.5%.
For traditional banks, this figure has more than tripled from a year ago, when it was just 3.3%. Payment delinquency rates in the fintech sector were already as high as 20% in the same month of 2025, but the rate still increased by 50%.
Experts say the trend reflects a steep rise in credit card debt and personal loans, driven by two main factors: a plunge in purchasing power and stubbornly high interest rates since President Javier Milei took office.
Since Maillay took office in November 2023, prices have soared 303.6%, but wages have not been able to keep up. For officially registered workers, wages fell by an average of 13% in real terms by February 2026. According to a report by the Center for Research and Training of the Argentine Republic (CIFRA), this decline varies significantly between the private sector (-8%) and the public sector (-22.1%).
The biggest impact on wages is that families are struggling to cope with ongoing price increases for utilities such as light, gas, water and transportation.
According to the Institute for Political Economy (IIEP) at the University of Buenos Aires (UBA), utility bills for Buenos Aires households have increased by 800 percent since Millay came to power.
Moreover, household spending has been reorganized, with utility bills now accounting for 42% of income, up from 38% in December 2023. This has led families to turn to non-traditional credit channels simply to cover basic necessities.
But the Argentine government shifted responsibility to the lenders. Central bank governor Santiago Bausili attributed the surge in defaults to banks providing “blind waves of credit” without properly assessing borrowers’ risk profiles.
Meanwhile, Economy Minister Luis Caputo claimed that families were over-borrowing at high interest rates in anticipation of inflation diluting debt, a strategy that failed as inflation slowed.
“Banks weren’t used to this and people ended up over-leveraging at very high interest rates thinking inflation would dilute the debt, but that didn’t happen,” Caputo said in a recent television interview.
From a banker’s perspective, Javier Bolzico, President of the Argentine Banking Association (Adeba), said: Latin America Report “Full recovery depends on the stabilization of real income and financial costs, but there are objective factors that point to stabilization of delinquency rates,” he said.
“The bank has been very prudent and proactive in terms of reserves and provisions. We are maintaining excess reserves to ensure that non-performing loans can be absorbed without difficulty,” Bolzico said, explaining that the bank is implementing measures and programs to provide solutions to customers based on each customer’s situation and capabilities. These proposals include lower interest rates and longer repayment periods.
Fight for survival, not speculation
The government frames the crisis as a problem of high interest rates and false expectations, but testimony and economic data paint a different picture. Credit is increasingly being used for basic survival.
Soledad Ramirez, a 43-year-old high school teacher with 20 years of experience, said he was using a credit card for the first time in his life to buy groceries and pay for health insurance. Despite having a retired husband and earning rental income from a small property, her family is deeply in debt.
“My salary is not enough to cover basic living expenses, so I start calculating how much I will pay with my credit card in the second half of the year,” Soledad said. The situation forced her to take on a side job to supplement her income. The crisis is also evident in her classroom. “On Mondays and Thursdays, I bring bread or biscuits to the students,” he said, adding, “I cry when the children ask for food.”
Victoria, who works for a multinational company, faced similar challenges. She recently had her credit cards canceled because she had “accumulated a huge amount of debt while paying fixed expenses such as rent, utilities, and Wi-Fi.” To make money, she started a business, but it failed, and now she runs ride-hailing apps like Uber and Didi.
“I feel helpless and frustrated because working multiple jobs and having a college degree is often not enough,” Victoria lamented.
Macroeconomic Headwinds
Economists argue that the sharp increase in delinquency is due to the worsening macroeconomy rather than individual financial mismanagement.
Matías Rajnerman, chief economist at Argentine bank Banco Provincia, noted that credit card use has shifted significantly to supermarkets, pharmacies and grocery stores.
“This is explained by the macroeconomy, not by changes in individual habits. Argentina is going through a process of job destruction and a decline in purchasing power,” Rajnerman said. Latin America Report.
Former central bank chief Jorge Carrera agreed, emphasizing that the sharp decline in economic activity and household income was the main cause of the default.
He argued that the current crisis is the result of a sudden collision between past expectations and the current recession.
“People still took out loans at a time when there were slightly more positive dynamics and, above all, very positive expectations,” Carrera said. Latin America Report. “They have taken on debt, and between the volatility of interest rates and the fact that disposable income to repay that credit is starting to erode for most families, these delinquencies are occurring.”
He also warned that official banking statistics often obscure the true depth of the crisis because public banks are constantly refinancing bad loans to avoid being labeled as delinquent.
IMF concerns grow due to fintech delinquency
The situation is particularly dire in the fintech sector, where digital wallets and unregulated lenders are charging usurious loans to low-income citizens.
“We have a perverse system where good payers end up paying very high prices for plans that already assume there will be payments that will be very difficult to collect,” Carrera said.
The growing vulnerability of the shadow banking sector has even attracted the attention of the International Monetary Fund (IMF). In a recent staff report, the multilateral body warned against the rapid expansion of non-bank credit providers, especially digital wallets.
The IMF pointed out that the asset quality of fintech companies has deteriorated significantly due to high interest rates, resulting in a delinquency rate of about 25%. The organization warned that this growing linkage with banks and mutual funds poses potential spillover risks to Argentina’s broader financial system.
Some solutions coming soon
Carrera was pessimistic about a quick recovery in the financial sector going forward. He emphasized that not only would interest rates need to fall for credit to be revitalized, but wages would also need to recover.
“It’s very difficult to have a significant credit dynamic between utility rate increases that eat away at disposable income and wage increases that, with a few exceptions, do not beat inflation,” Carrera warned. While he acknowledged the emergence of some low-interest mortgage options, he noted that these options are highly selective. “The 25 to 30 percent of the population with stable or better incomes typically do not need credit.”
Ultimately, Carrera concludes, “This is a classic credit crisis that emerges during recessions and stagnation. Now banks have to refrain from these delinquencies and that is why I think they will be slow to restore very strong credit dynamics.”
Featured image caption: President Javier Millay.
Featured image credit: Mídia NINJA via Creative Commons.
