You know the new credit card rules are already in place, right? From now on, users must install the debts on the card after 30 days. However, if you are still unsure about what has changed in practice, this text is for you!
In it, you will find the main points about the change in the use of revolving credit and will understand how to avoid losses. Keep reading and learn all about it!
What are the new rules of the 2017 credit card?
You may have noticed that your bill card comes with two values:
- the total, with everything you spent;
- minimum, which is 15% of the total.
By the beginning of this year, you could pay the minimum whenever you wanted. The difference was then passed to the next invoice plus interest, which is called the revolving credit.
This, however, is over. “New rules were set by the Lifeline Bank’s National Monetary Council (CMN) last January, and they began to apply on April 3. They were created to combat default and lower interest rates. The main change is that there is now one-month limit on revolving credit.
In practice, it works like this: Imagine that your bill came to $ 1,000 and you paid a minimum of $ 150. Over the $ 850 the difference between the total and the minimum has been added $ 102 interest (we are using as an example a rate of 12%, still quite common in this type of operation).
On the next invoice, you will not be able to pay the minimum of this $ 952. The only two options for this amount will be to pay the total or install the invoice.
How to avoid losses with card debt?
In the old rules, a lot of people were in danger of going into the snowball effect: one always paid the least, and the high interest rates made debt impossible to pay. In the case of lower interest rates in installments, the idea is to have a smaller and more affordable debt.
However, attention must be paid: the interest on installment payments is lower than on revolving credit, but it is still very high. In addition, uncontrolled spending, added to past installments, may compromise your budget.
Pay the full amount whenever possible
The best way to avoid debt remains the same as always: pay the full amount whenever possible. To do this, try to control your spending and prefer cash payment, with cash or debit card. An app can help you organize your expenses.
Quite early next month
If you could not pay the full amount, avoid further credit card spending and try to pay off the next month.
Despite the high rate of revolving, in short periods the total value tends to be smaller than the sum of installment payments. So you do not lose so much money.
See if a loan is cheaper than installment
If, even by controlling your spending, you do not have the money to pay the full bill the following month, take a moment to review your options.
Your card administrator will offer an installment payment on the invoice itself. Before accepting it, consult rates and terms to make a personal loan and pay off.
Today, it is possible to find companies that offer lower interest credit and the whole process over the internet, without having to leave home, in a practical way quickly.
Now you know how the new credit card 2017 rules work! Want to always stay on top of financial matters? Subscribe to our newsletter and receive our posts in your email.