A credit card in hand, it’s time for shopping or paying a bill and… credit or debit ?! If the answer is mostly credit, this text is important to you.
New rules for using the credit card have been created. They are related to the fees for using the revolving card, the interest we must pay when we are unable to fully pay off the card bill. In this case, we end up splitting the debt and see ourselves in what could be the beginning of a snowball.
What credit card do I want you for?
The National Monetary Council (CMN) has forbidden banks from leaving their customers on a rotating basis for more than a month.
This means that those who are unable to pay off their credit card bill at once will have the debt in installments with lower interest rates from the following month. The rules have been in place since the beginning of this week.
As said before on the blog, Brazilians are the people who pay the most interest in the world. And credit card interest is the most abusive: debt on the card grows almost 500% per year.
How is it today
The customer enters the revolving account when he does not pay the full amount of the card bill. The difference between what he paid and the total is subject to interest and taxes (IOF). Look how a debt of R $ 1,000 would look after one year:
How it will be going forward
The customer still continues to enter the revolving section, but if he is unable to pay the entire invoice in 30 days, the bank is obliged to install this debt with lower interest rates. Via payroll or personal credit for example, which has much better rates than the revolving credit card.
Within the new collection model, each bank will act in a different way. Interest rates and credit terms may vary. Contact your manager and inquire about the details. The total to be paid can decrease a lot with the new rule, see the image below.
Escape the rotary
Although it became cheaper to enter the rotary, this is not a good idea. “The conditions are better than before, but the rotary is still very dangerous”, warns the chief economist of SPC Brazil, Marcela Kawauti. If you usually pay most of your spending on credit, chances are you will be unable to pay the entire bill and fall on the revolving.
Remember: it is always better to pay cash. The credit card should only be used in emergencies, to buy high-value goods or to make purchases online.