A hot topic at the moment, the average total interest rate charged by banks on revolving credit card payments rose 8.7% from June to July.
The Central Bank (BC) also reported that the rate went from 437.0% to 445.7% per year.
The emergency credit modality is at the centre of the country’s economic and political discussions at the moment due to the more expensive rates on the market.
The issue is the subject of a working group formed by the Ministry of Finance, the Central Bank and the banks.
Proposals
Recently, Roberto Campos Neto, the president of the Central Bank, said that the solution was “moving towards” the end of the revolving credit card, with the card debt being automatically transferred to the instalment plan with interest.
Since 2017, banks have been obliged to transfer revolving credit card debt to instalments after one month, at a lower interest rate.
Campos Neto also indicated that there could be a disincentive fee for “long” interest-free instalments, which is in the interest of the banks, while Finance Minister Fernando Haddad is against ending interest-free instalments.
In addition, last August 24th, deputy Alencar Santana (PT-SP) proposed limiting the rate on revolving and interest-free instalments to the principal amount of the debt, in his opinion on the Desenrola project.
The measure would apply if the banks do not propose self-regulation within 90 days of the law coming into force.
In the case of instalments, the interest went from 196.1% to 198.4% per year between June and July.
Considering the total credit card interest rate, which takes into account revolving and instalment operations, the rate went from 104.2% to 102.7%.
Original Story: CNN Brasil | Thais Barcellos and Eduardo Rodrigues
Photo: Banco Central do Brasil
Edition and translation: Prime Yield