central bank

Changes in the rules of the card encouraged the reduction of interest and facilitated the lives of consumers

After measures taken by the government as of April, the revolving credit card rates fell. S ccording to the Central Bank in the month of  November the rate reached 218.3% per year, a decrease of 2.8 points compared to October. Before the rules were changed, the interest on the card exceeded 400% per year. In some cases, it could reach 800%.

The credit card rotary occurs when the consumer does not pay the full amount of the invoice, when he makes, for example, only the minimum payment. In making this choice, it is as if the customer had made a credit operation to finance the debt, but with very high interest rates.

New rules

In April, a rule that encouraged the reduction of interest rates and avoided over-indebtedness came into force. In practice, the consumer now is no longer stuck on the credit card machine.

Whenever the consumer enters the revolving credit, after 30 days the bank will have to offer installment of the balance due. The customer also has the option of making the cash payment after that period. If he does not choose either option, he will default.

Before these new rules, if the client made an invoice of $ 1,000, but had only $ 150, the debt could become priceless. In the first month, the outstanding balance would jump from R $ 850 to R $ 948.72. At the end of the sixth month, it would be R $ 1,708.90.

High invoice

The debt, if not fully paid off, rose very fast due to interest. Credit card is one of the modes with the highest rates in the Brazilian market. In December last year, according to the Central Bank, it reached 484.6% a year - the equivalent of 15.85% a month.

At such high rates, it has become common for clients to default. The account began relatively small and, after a few months, was almost impossible to pay. Now, if the customer makes an invoice of $ 1,000, but only pays $ 150, he enters the press for only a month. The bank will have to contact the consumer and ask if he wants to install or pay cash.

Source: Government of Brazil, with information from the Central Bank