New revolving credit rule to reduce card debt

In Brazil, more than 70% of the population suffers from debt, and credit card bills are one of the main reasons. One of the factors behind this debt is due to revolving fees that are charged when a consumer pays part of a bill, leaving part of the amount due for the following month.

How did it work before?

According to economist Adesantos Amorim, before the law that came to combat arbitrary interest rates, when the customer did not pay the bill in full, the bank would automatically pay the remaining amount in installments, generating new debt with an interest rate, even lower than the revolving, that exceeded 300% per annum.

Rule changes

With the implementation of the new rule this year, the central bank set the interest rate on card debts at 100% of the amount owed. That is, if the customer has a debt of R$ 800 from last month, in the following month this accumulated debt with interest cannot exceed the value of R$ 1,600.

New methods

From July this year, if the customer wishes, he will be able to transfer the debt to another bank offering a lower interest rate. Moreover, he will have the option of transferring the debt from one card company to another, or from one bank to another that offers more advantageous terms.

Guidelines for the year

According to economist Adesantos, the basic advice for those who have debt is to organize their accounts and try to avoid using a credit card for a period of time so that they can pay it off and not increase the debt. He also adds that it is essential to spend less than you earn, and that a financial reserve of at least 10% of your salary for emergencies can be helpful.

These practices will avoid imbalances in accounts and help start the year off right, in addition to avoiding creating a “snowball” of debt. “With a few simple changes, people can get to the middle of the year feeling like it was worth it,” Adesantos concludes.