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New law limits abusive interest rates on credit cards! The government is changing the rules on revolving credit to protect Brazilians from debt
Do you have credit card debt? As of January 2024, Brazil has count on a new law which establishes limits for interest rates on revolving credit cards. This legislation, sanctioned by President Luiz Inácio Lula da Silva, is part of the Desenrola Brasil Program and its main objective is to combat abusive interest rates and the growing indebtedness of consumers.
Revolving credit is one of the most expensive credit lines in the country, and the new measure seeks to bring greater financial balance to Brazilian families. Instituted by Law No. 14.690/2023, sanctioned in October 2023, the initiative aims to reduce the impacts of high interest rates on consumers.
How the new Credit Card interest law works
The legislation establishes that, if the consumer is unable to pay your credit card bill in full, The accumulated debt cannot exceed twice the initial amount. For example, a debt of R$200 cannot exceed R$400, including interest and other charges. However, it is important to note that this rule only applies to debts incurred from 2024 onwards, creating a new level of financial protection for credit card users.
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This new law represents a significant step forward in the control of revolving credit, a type of credit notoriously associated with abusive interest rates. The regulation seeks to prevent debts from becoming unmanageable, promoting greater transparency and predictability in the use of credit cards.
Credit card interest rates are still extremely high
Even with the implementation of the new law, credit card interest rates remain high in Brazil. The Central Bank revealed that, in September 2024, revolving credit interest rates reached an impressive 438,4% per year, up from 426,9% recorded in August. These figures show that, despite the new legislation, the Brazilian financial environment still presents major challenges.
High interest rates on credit cards are justified by the lack of collateral and the high risk of default, characteristics inherent to revolving credit. This reality reinforces the need for regulations such as the new law sanctioned by the Lula government, which aims to balance the market and make access to credit more viable for consumers.
New government law promises financial balance and saving Brazilians' pockets
The Lula government, in partnership with the National Monetary Council, drafted the new law to offer fairer and more predictable interest rates to consumers. According to Finance Minister Fernando Haddad, the initiative is essential to help Brazilians better organize their finances and face the impacts of abusive credit card interest rates.
By setting clear limits on revolving credit, the measure contributes to creating a more balanced economic environment. This initiative allows consumers to protect themselves from excessive debt, helping them to better manage their debts.
Impacts of the New Law on the family budget
The new rule brings significant relief to workers, especially those facing financial hardship due to high credit card interest rates. By limiting the impact of revolving credit, the legislation seeks to reduce debt and give families the opportunity to regain their financial health.
Although the new law does not completely eliminate charges such as IOF, its implementation represents a significant step towards building a more favorable economic scenario. For many Brazilians, this change means the chance to reorganize their finances and avoid defaulting on their debts.
New law and reduction of default
One of the main expectations of the new law is to reduce default rates, creating conditions for a more sustainable credit system. With clear limits on credit card interest, consumers are expected to adopt more responsible financial practices.
The new legislation combats abusive interest rates and encourages a more balanced and predictable credit market. In this way, the Lula government seeks to promote an economy where consumers have greater control over their debts and can make more informed financial decisions.
