Brazil has the highest interest rates in the world and, even with the cuts announced by the Central Bank in the Selic (basic interest rates of the economy), the Brazilian should be aware of the interest charged on the credit market. Those who need to save to realize their dreams should not only worry about saving money, but also be careful not to lose money by paying high interest rates.
And how to avoid high interest rates? The answer is simple: making the right choices! But have you ever stopped to think why they exist and are present in the day to day? Understanding the basics of interest is important to your financial planning. Then read the full story and learn how to pay less interest and have more money for you.
Why are there interest rates?
The basic interest rate (Selic) is the central mechanism of the Central Bank to fight inflation in the country. The Selic is only a reference for the collection of interest in credit operations for consumers.
It is used in loans between banks and decided by the Central Bank in the Monetary Policy Committee (Copom), which happens every 45 days and therefore suffers variations: it can increase, decrease and remain stable throughout the year.
Banks and financial institutions have their own interest rates to make a profit. This is why the credit card rate, for example, is much higher than the Selic rate. Compare:
|Revolving credit card interest rate||Selic interest rate|
|323.7% per year (November 2017)||7.5% per annum (November 2017)|
In December 2017, the Central Bank reduced the basic interest rate (Selic) by 0.5 percentage point to 7% per year, the lowest level in history. The news has taken over the media, but few know that the fall of the Selic is not felt in the consumer’s pocket.
Under government pressure, banks tend to reduce interest rates on some of their credit lines, but not significantly, that is, they remain the highest on the market. Beware of the false sense of fall of them, because these variations of rates in the banks are strategic, that is, at no time the consumer comes out to the advantage.
Credit Card Interest Rate
Brazilians pay the world’s most expensive revolving credit, according to a Proteste survey, with an average of 352.76% per year. It is triggered when the consumer delays the payment of the credit card invoice or pays the minimum amount of the invoice (or any value less than the total). For this reason, getting away from high credit card interest requires planning and discipline.
With the new credit card rules , as of April 2017, card operators are required to offer, after 30 days on the rotary, the installment of the debit balance of the credit card. Still, depending on the consumer profile, the interest of the installment can be very high. Use your credit card consciously. Learn how to use the credit card in your favor.
The only way to get away from high credit card interest is to pay the bill in full and until the due date.
If you do not have the money to pay the full amount of your credit card bill, you can opt for a smaller, installment-type personal loan that fits in your pocket.
It is a smart choice because you are opting to get away from the higher interest rates that are in the market while allowing your credit card to be reserved for emergencies.
At Credit Advisor, your personal loan application is online, fast and secure. And the best: you can receive several proposals and choose the one that best suits your need. Do not waste any more time on your credit card debt snowball!
Overdraft interest rate
In the highest interest ranking, the special check occupies the second place, losing only to the revolving credit.
Most banks offer this mode of credit to their customers automatically, inclusive, it may appear on the bank balance and cause the feeling that you have more money. And to facilitate, the money can be used in any way, in cash, in debt or even for bank transfer.
In an emergency, overdraft can be very useful, but you have to make sure that the amount used will be paid as soon as possible if you want to avoid high interest rates.
Option to organize your personal finances
The best solution for anyone who is in need of cash and want to get away from high interest credit card and overdraft is to seek out cheaper credit lines such as personal loans.
In addition to the possibility of paying lower interest rates, you choose the number of installments and the monthly amount that fits in your pocket, the best due date, and you still have rebate discounts. It also has no surprises: you stay within the rates that will be charged.