Do you know how it works? Selic rate of the central bank in Brazil? Did you know that it's important to know about your changes to have greater control over your finances, especially your credit card?
This is the topic we will discuss in this post, but remember that in our Digital Seguro portal, you will find information on a wide range of topics involving your financial life: credit cards, financial planning, investments, loans, and much more.
Check out all the information about the Selic Rate below, according to information from the Central Bank.
After all, what is this Selic rate?
SELICE stands for Special Settlement and Custody System. This term is used in the national and international banking market. According to the Central Bank, the Selic rate serves to monitor and control inflation and also governs the issuance, purchase, and sale of securities. It is a type of model for the cost of credit in the country.
The Selic is the benchmark interest rate for the Brazilian economy. It also serves as a financing tool for overnight transactions, secured by government bonds.
What does this Rate Control?
In general terms, it controls investments such as savings accounts, CDBs, LCIs, LCAs, and LCs. Investors in many Brazilian bonds profit from abusive interest rates compared to consumers. This allows more money to flow into Brazil, triggering a currency movement.
Based on the Selic rate, the responsible sectors set the interest rate for savings accounts, credit cards, overdrafts, and installment plans. Banks use it to calculate the interest rate on a loan.
Let's look at an example:
If the Selic rate is low, the best thing to do is take out a loan or make purchases on credit. If it's high, it's better to do nothing and save money.
However, if the Central Bank decides to reduce the Selic (something practically impossible), this drop may take time to reach consumers. This is because banks charge interest, taxes (IOF), costs involved, defaults, and profits.
Final considerations – another interference from Selic
It affects investments because investors who allocate their money to CDI funds will be affected by the fact that most of these funds follow the Selic rate. Therefore, when Copom decides to reduce the Selic rate, the yield will decrease on all fixed-income investments based on the CDI, such as savings accounts.
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