Clipping of news on Brazilian Culture, Law and Citizenship
1/30/2017
This article was translated by an automatic translation system, and was therefore not reviewed by people.
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The consumer economy with the new rule that limits the use of the credit card rotary can reach almost 50% in 12 months. This is the difference that the customer will not pay when migrating from more expensive interest from the revolving credit to the lower rates of installment credit.
As of April, credit card companies will no longer be able to finance their customers' outstanding balance through the revolving credit for more than one month, according to the decision of the National Monetary Council (CMN) taken last Thursday (26).
According to the most recent survey by the National Association of Finance Executives (Anefac), the average interest of the revolving credit - charged to those who do not pay the entire credit card bill - came to 15.33% a month at the end of December. For installment credit, the average rate was 8% per month.
The difference is greater the longer the funding time. A debt of R$ 1 thousand on the card's invoice rises to R$ 1,534 in the revolving credit after three months. With the new rule, whereby the highest rate - 15.33% per month - affects the first 30 days and the rate of 8% per month is the remaining two months, the debt increases to R$ 1,345.20, difference Of 12.3%.
At the end of 12 months, the disparity is even greater. A debt of R$ 1 thousand in the invoice will reach R$ 5,537.42 at the end of the period in the current system, financed through the revolving credit. Under the new rule, the same debt would be adjusted to R$ 2,689.07, a difference of 51.4%.
The calculation takes into account the average interest rates charged at the end of December. The effective economy can vary because banks customize rates for each consumer on the rotary and installment credit. Final interest may vary depending on the customer's history and ability to pay.
Non-compliance
In announcing the new rules last Thursday, Central Bank Regulation director Otávio Damaso explained that the high interest rates on the revolving credit are related to the high default rate in this modality. According to the monetary authority, delinquency on the credit card was at 37% for individuals and 59% for companies at the end of December.
In relation to installment credit, the default rate is much lower: 1.1% for individuals and 2.3% for companies. "Today, once the customer enters the rotary, he does not know when he will pay the balance due. This creates uncertainty that does not exist in installment credit, which allows institutions to adopt an expected cash flow from the installments that will enter, giving greater predictability and lower interest income, "said the BC director.
The restriction on the use of the revolving credit had been announced in December by Finance Minister Henrique Meirelles as part of the microeconomic reform measures. At the time, the minister announced the intention of the government to reduce, from 30 to two days, the term of payment of the card administrators to the shopkeepers. The move, according to the administrators, would hurt small card companies and favor large banks.
Edition: Juliana Andrade
Source: EBC
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This article was translated by an automatic translation system, and was therefore not reviewed by people.