Buenos Aires, Argentina – “By the 10th or 15th of the month, I usually have to borrow money just to buy groceries and pay basic expenses,” says Victoria Pereira, 33 year old Argentine who works at a multinational firm. She is one of thousands of people suffering from the country’s soaring household debt delinquency.
According to the latest data from Argentina’s Central Bank (BCRA), the delinquency rate for bank loans reached 11.5% in March, while it hit 30.5% for digital wallets (fintech credit).
For traditional banks, the figure more than tripled compared to a year ago, when it stood at just 3.3%. While payment arrears in the fintech sector were already higher—at 20% in the same month of 2025—the rate still increased by 50%.
The trend reflects steeply rising credit card debt and personal loans, which experts say are driven by two key factors: a sharp drop in purchasing power since Javier Milei became president and stubbornly high interest rates.
While prices have surged by 303.6% since Milei came to power in November 2023, wages have failed to keep up. For formally registered workers, salaries saw an average decline of 13% in real terms in the period to February 2026. This drop varies significantly between the private (-8%) and public (-22.1%) sectors, according to a report by the Center for Research and Training of the Argentine Republic (CIFRA).
The strongest impact on salaries is that families are struggling to cope with continuous price hikes for utilities such as light, gas, water and transport.
Since Milei took power, utilities expenses for a household in Buenos Aires have increased 800%, according to the Interdisciplinary Institute of Political Economics (IIEP) of the University of Buenos Aires (UBA).
Moreover, household spending has been reconfigured, with utility bills now eating up 42% of earnings, up from 38% in December 2023. Because of that, families have been driven toward non-traditional credit channels simply to cover basic necessities
But the Argentine government has shifted the blame onto lenders; Central Bank President Santiago Bausili attributed the spike in defaults to banks handing out a “blind wave of credit” without properly assessing borrowers’ risk profiles.
Meanwhile, Economy Minister Luis Caputo argued that families over-borrowed at high interest rates, expecting inflation to dilute their debts – a strategy that failed as inflation slowed.
“Banks were not used to this, and people became over-indebted at very high rates, thinking that inflation would dilute the debts, and that did not happen,” Caputo said during a recent television interview.
From a bankers view, the president of the Association of Banks of Argentina (Adeba), Javier Bolzico, told Latin America Reports that “there are objective elements pointing to a stabilization of delinquency rates, although a full recovery will depend on the stabilization of real income and financial costs”.
“Banks have been very prudent and proactive in terms of reserves and provisions. They maintain excess reserves that allow them to absorb non-performing loans without difficulty”, said Bolzico and explained that bank are implementing actions and programs to offer solutions to their clients, based on each client’s situation and capabilities. These proposals include interest rate reductions and extended repayment terms.
A fight for survival, not speculation
While the administration frames the crisis as an issue of high interest rates and miscalculated expectations, testimonies 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 she is using her credit card to buy groceries and pay for health insurance for the first time in her life. Despite having a retired husband and receiving rental income from a small property, her family is heavily in debt.
“By the second half of the month, I start calculating which payments I will put on the credit card because my salary is not enough to cover basic expenses,” said Soledad. The situation has pushed her to take a second job to supplement her income. The crisis is also starkly visible in her classroom. “On Mondays and Thursdays, I bring bread or biscuits to my students. The kids ask you for food, and it brings tears to my eyes,” she added.
Victoria, the worker at a multinational firm, shared a similar struggle. She recently had her credit card cancelled after “accumulating massive debt from paying fixed expenses like rent, utilities, and Wi-Fi”. To make ends meet, she started a business that failed and now drives for ride-hailing apps like Uber and Didi.
“It makes me feel powerless and frustrated because even with several jobs and a university degree, many times it is not enough,” lamented Victoria.
Macroeconomic headwinds
Economists argue that the delinquency surge is driven by macroeconomic deterioration rather than individual financial mismanagement.
Matías Rajnerman, Chief Economist at Banco Provincia, an Argentine bank, noted that credit card use has shifted massively toward supermarkets, pharmacies, and grocery stores.
“This is not an individual change of habit, but is explained by the macroeconomy. Argentina is going through a process of job destruction and a fall in purchasing power,” Rajnerman told Latin America Reports.
Jorge Carrera, a former director of the Central Bank, agreed, highlighting that the sharp reduction in economic activity and family incomes is the main driver behind the defaults.
He argued that the current crisis is the result of a sudden clash between past expectations and the current recession.
“People took out loans at a time when there was still a slightly more positive dynamic and, above all, very positive expectations,” Carrera told Latin America Reports. “They went into debt, and then, between the volatility of interest rates and the fact that disposable incomes to pay off that credit began to fall for the majority of families, you get this delinquency phenomenon.”
He also warned that official banking statistics often mask the true depth of the crisis, as public banks constantly refinance bad loans to avoid classifying them as delinquent.
Fintech arrears raise IMF concerns
The situation is particularly severe in the fintech sector, where digital wallets and unregulated lenders charge usurious rates to lower-income citizens.
“There is a perverse system where good payers end up paying very dearly for a scheme that already assumes there will be payments that are very difficult to collect,” Carrera said.
The growing vulnerabilities in the shadow banking sector have even caught the attention of the International Monetary Fund (IMF). In its latest Staff Report, the multilateral organization warned about the rapid expansion of nonbank credit providers, notably digital wallets.
The IMF noted that asset quality among fintechs has weakened significantly amid high interest rates, exhibiting delinquency rates of around 25 percent. The organization warned that these growing linkages with banks and mutual funds pose potential spillover risks for Argentina’s broader financial system.
Few solutions on the horizon
Looking ahead, Carrera was pessimistic about a quick recovery for the financial sector. He stressed that for credit to reactivate, not only do interest rates need to drop, but wages must also recover.
“Between the utility rate hikes that take away disposable income and salary increases that—with few exceptions—are not beating inflation, it is very difficult to have a significant credit dynamic,” warned Carrera. While he acknowledged the emergence of some lower-rate mortgage options, he pointed out they are highly selective. “The 25 to 30 percent of the population with stable or better incomes generally do not need credit.”
Ultimately, Carrera concluded: “This is a typical credit crisis in a context of recession and stagnation. Now banks have to swallow this delinquency, which is why I believe they will be slow to recover a very strong credit dynamic.”
Featured image description: President Javier Milei.
Featured image credit: Mídia NINJA via Creative Commons.
