New measures announced by the National Monetary Council (CMN) have begun to take effect and change the minimum payment amount on the credit card statement and limit charges. Both definitions have been in force since June 2018 and are aimed at lowering interest charged on the modality.
The minimum credit card payment, which was set at 15% of the invoice amount, will be determined by each financial institution. Companies can choose this amount according to the customer’s credit profile, which should be notified of any changes 30 days in advance.
With the change, both customers and banks should benefit. On the client side will be the possibility of not getting into an expensive debt that will not be able to pay. On the bank side, the advantage comes from the fall in the risk of default with the new credit card rules.
Regular vs. non-regular interest
The second change aims to discipline the fees and interest charged. There are currently two types of credit card interest charges: regular and non-regular.
The regular has average interest of 306.14 per year, according to the LP Square Bank, and is applied to customers who enter the revolving after paying the minimum amount. Customers who do not pay the minimum, enter the non-regular category, with average interest of 330.95 per year.
Change reaches this second category. In addition to normal interest, these customers are subject to new fees and penalties. In practice, only the regular fee will be charged to all customers.
Still, the credit card bill was not a good deal. Interest continues to be higher than personal loans , payroll loans and secured loans. It is very important for the client to assess whether the bank’s offer is indeed the best option or whether it is better, before late payment or installment, to apply for a lower interest loan.
Remember that since April 2017, the consumer can only pay the minimum invoice amount once. The following month, he will have to choose between the total invoice amount or installment debt in another line of credit.
Although the measure is intended to lower interest rates, the customer will continue to pay high fees if they do not pay the full invoice amount. Enrique Lim, Protest Executive Manager, explains in this video when it is advantageous to take a loan to pay the revolving card.