With the new law, millions of Brazilians will benefit from the reduction of abusive interest rates on credit cards.
A The new credit card law has finally come into effect, bringing relief to millions of workers and retirees, especially those who depend on the National Institute of Social Security (INSS). As of January 03, Brazilians began to feel the effects of the new rules that limit abusive interest rates on revolving credit, a measure that promises to revolutionize the credit card market in the country.
What changes with the new law?
According to the Ministry of Finance, the new credit card law was created to limit the charging of interest on revolving credit, one of the most expensive modalities in Brazil, which reached 431,6% per year in October. From now on, the total debt, plus interest, cannot exceed twice the principal amount. This means that if you have a debt of R$100 on your card, even with the application of interest and charges, the final amount cannot exceed R$200.
This is a significant change, as many consumers were caught off guard when they saw their debts multiply abusively. Revolving credit, which is automatically activated when the full payment of the invoice is not made, has always been a financial trap for many Brazilians. Now, with the new rule, this reality is starting to change, bringing more security and predictability to consumers.
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The impact of charging interest
It new credit card law was sanctioned after approval by the Senate, in October last year, and went through a 90-day period for card issuers to find a solution to limit interest rates. However, as there was no agreement between the financial institutions, the government established the ceiling set by law. Financial sector experts believe that this change not only benefits consumers, but also forces the market to review its interest charging practices.
However, it is important to highlight that this measure can also generate some indirect impacts. With the limitation of interest rates, there may be a reduction in the supply of credit, as banks will rethink their strategies to adapt to the new rules. Still, the decision is seen as positive, especially for those who are in debt and were suffering from the exorbitant rates that were being charged.
Portability of the outstanding balance
Another important point of the new credit card law is the possibility of free portability of revolving credit card debts. Starting July 1, 2024, customers with outstanding balances will be able to transfer their debt from one financial institution to another free of charge. This could bring more competitiveness to the market and allow consumers to find more favorable conditions to pay off their debts.
How to avoid falling into the interest trap
Despite the limitation imposed by the new law, experts continue to recommend that consumers avoid entering into revolving credit. The best strategy is still to pay the full credit card bill whenever possible, thus avoiding activating the revolving credit and, consequently, the charging of interest. If this is not feasible, it is worth considering negotiating with the financial institution or using other credit options, such as paying the bill in installments.
How to increase your credit card limit
With these changes, many consumers may be wondering how to improve their relationship with their credit card and even increase their available limit. Here are some tips for doing so:
Pay your bill on time: Payment history is one of the main factors in increasing the limit.
Check your credit score regularly: Keeping your score up to date helps demonstrate that you are a good payer.
Clear your name: If you have outstanding debts, settling them increases your chances of having more credit.
Embrace Open Finance: This can help institutions have a clearer view of your financial behavior, increasing the chances of offering credit.
Focus your transactions on your credit card: The more you use the card, the more chances you have of increasing your limit.
With the new credit card law, the Brazilian financial scenario is starting to change for the better, offering more protection and clarity to consumers. The reduction in charging of interest abusive measures on the rotating system is an important victory, which promises to benefit millions of Brazilians, especially those who need it most.
What do you think of this new measure? new credit card law Will it really help reduce debt and protect consumers? Comment here and share your opinion!