Digital Banking: Nubank Expands Secured Credit Offering, Introduces FGTS-backed Loan

Nubank, a leading financial technology company in Brazil, is set to launch a new type of secured loan for its customers known as the FGTS-backed loan. This move comes as part of the company’s plan to expand its secure credit offering in 2023. The new loan product will be gradually made available to eligible customers.

FGTS, which stands for Severance Pay Fund for Length of Service, is a mandatory savings fund for employees in Brazil. Employers are required to deposit a percentage of an employee’s monthly salary into this fund. The money in the FGTS account can only be withdrawn in the employee’s birthday month or on specific occasions, such as job loss or making a down payment on a property.

Nubank’s FGTS-backed loan offers an interest rate starting at 1.3% per month. The exact interest rate is determined based on an individual analysis of each eligible customer’s profile.

Livia Chanes, Nubank Brazil’s country manager, expressed the company’s commitment to providing financially advantageous credit options with reduced risk. She stated, “Loans backed by FGTS are one of the best examples in both aspects. The option also allows the customer to obtain credit responsibly, without compromising part of their monthly budget, optimizing their money.”

Customers who opt for the FGTS-backed loan at Nubank will have the possibility of early withdrawal of up to 12 annual installments. The loan repayment occurs annually and directly from the borrower’s FGTS account balance, ensuring it does not affect their budget or monthly income.

The entire loan request process and management can be done directly through the Nubank app, including the option for early repayment of annual installments.

The FGTS-backed loan is an addition to Nubank’s existing range of credit options, including loans with investments as collateral, payroll-backed loans for federal public servants (known as NuConsignado), and personal loans that have been available since 2019.

Nubank’s introduction of the FGTS-backed loan expands access to credit for a significant portion of its customer base in Brazil, which currently stands at over 80 million.

With its commitment to providing advantageous credit options and a user-friendly mobile app, Nubank continues to solidify its position as a leading financial institution in Brazil.

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