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With New Law, Millions of Brazilians Will Benefit from the Reduction of Abusive Credit Card Interest Rates.
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). Starting January 3rd, 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, including interest, cannot exceed double 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 bill payment 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 Interest Charge
This new credit card law was sanctioned after the Senate’s approval in October of last year and went through a 90-day period for card issuers to find a solution for limiting interest. However, since there was no agreement among financial institutions, the government established a legally fixed ceiling. Industry experts believe that this change not only benefits consumers but also forces the market to reconsider its interest charging practices.
However, it is important to emphasize that this measure may also generate some indirect impacts. With the limitation of interest rates, there could be a reduction in the availability of credit, as banks will rethink their strategies to adapt to the new rules. Still, the decision is seen as positive, especially for those in debt who suffered from the exorbitant rates that have been charged.
The Portability of Outstanding Debt
Another important point of the new credit card law is the possibility of free portability of revolving credit card debts. Starting July 1st, 2024, customers with outstanding balances will be able to transfer their debt from one financial institution to another at no cost. This can bring more competitiveness to the market and allow consumers to find more favorable conditions to settle 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, thereby avoiding the activation of revolving credit and, consequently, interest charges. If that is not viable, it is worth considering negotiating with the financial institution or using other credit options, such as bill installment plans.
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 that:
Pay Your Bill On Time: Payment history is one of the main factors for 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, resolving them increases your chances of getting more credit.
Adopt Open Finance: This can help institutions have a clearer view of your financial behavior, increasing the chances of credit offers.
Consolidate Your Transactions on the Credit Card: The more you use the card, the more chances you have to increase your limit.
With the new credit card law, the Brazilian financial landscape is starting to change for the better, offering more protection and clarity to consumers. The reduction in the charging of abusive interest on revolving credit is an important victory that promises to benefit millions of Brazilians, especially those who need it most.
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What do you think of this new measure? Will the new credit card law really help reduce debts and protect consumers? Share your opinion here!
Tudo muito tendencioso, tudo muito louco… Cada cabeça será sua sentença… Muitas falácias cometidas neste desgoverno ****… Poucos com visão ou alguma inteligência… Afinal a **** humana não tem limites… Saberemos o que nos reserva no futuro por conta da gestão **** deste desgoverno ****.
Isso é horrível!pois muita gente simples usa comprando na promoção para pagar no final do mês.
Por que está lei não se aplica também ao Cheque Especial e outras operações financeiras?