Have you paid the minimum and do not know how to calculate the interest of the credit card? Credit card interest, called revolving credit, is triggered when the full amount of the invoice is not paid. The minimum payment is a service offered by the credit card companies for those who do not have the money to pay the full amount of the invoice and works as a debt financing. What sounds like ease, does not it?
Meanwhile, the average interest rate on the card in Brazil is 352.76% per year and 15% to 20% per month, one of the highest rates in the world, according to a survey by Lending Matters. In order to have a comparison, still according to Lending Matters, the percentage of interest of the annual credit in Argentina is of 47.40% and 24.99% in the United States. The interest rate of the revolving credit in the country has been declining, but is still not very significant for the Brazilian pocket.
New credit card rules
In April 2017, the new rules of the credit card came to be valid. As of 30 days of the revolving credit, the card administrators had to offer the option to install payment of the balance due to consumers.
The installment of credit card also works as a debt financing and has high interest rates. As opposed to interest on the revolving credit, which decreased the percentage during 2017, interest for those who opted for the installment of the invoice increased 13% in relation to the year 2016.
How to Calculate Credit Card Interest
Now that you know more about revolving credit, learn how to calculate credit card interest:
Credit card: calculation of minimum payment interest
- Get the full amount of the invoice that paid the minimum. Example: R $ 880.00 .
- Find in the invoice the amount allowed for the minimum payment. Example: R $ 176.00 .
- Calculate the revolving balance as follows: total invoice amount (subtracting) minimum value. Example: R $ 880.00 – $ 176.00 R = R $ 704.00.
- What is the interest rate of the rotary per month? Call your service provider if you do not find this information on the invoice. Example: 14.72% .
- Now that you know the percentage, do the following calculation to find the interest: balance (multiplied) by the interest rate. Example: R $ 704.00 x 14.72 = R $ 103.62 .
- To find out what the debit balance will be on the next invoice, calculate: revolving balance (plus) at revolving interest. Example: R $ 704.00 + R $ 103.62 = R $ 807.62 .
In this example, it is clear that the previous month and the next month have almost the same amount for payment. This means that revolving credit does not help solve the problem of the lack of money to pay the credit card bill. It only works when you are sure that you will be able to make the full payment of the invoice the following month.
When paying a value greater or equal to the minimum, in addition to the interest of the revolving credit, the Tax on Financial Transactions (IOF) is charged. Through the IOF, the government tracks the demand and supply of credit in the country.
Credit card: installment is the best option?
The installment interest rate has variations, according to the operator of the credit card and risk profile of the borrower. It is important to note that, when you install the debit balance of your invoice, the limit is compromised. Added to the installment interest, you run the risk of being without limit for a long time, until several installments are paid.
So before splitting your credit card bill, be aware of other options to pay the full amount of your bill. With a personal loan in hand, plus the possibility of paying less interest, you do not compromise your credit card limit.
To control finances, while you are paying the personal loan, it is best to reserve your credit card for emergency situations.