How much interest is charged on credit cards? There are basically 3. In this article, we will review each one in detail, so pay close attention so that you know how to identify them and can choose the best option.
Interest can become dangerous if you are not aware of it, as it can end up generating huge debts if poorly managed.
1) Interest in installments.
This is the interest applied to the installments of a purchase. It is generally the lowest interest rate in relation to the other two and is added to each of the installments.
Example: If you buy something for R$10,000 in 10 installments, each installment, without interest, should cost R$1,000 reais. But with interest of 1%, the rate will be R$1100 per month.
There are many companies associated with credit cards that offer the option of purchasing in installments without interest. Therefore, choose carefully the associated companies that offer these types of rates. However, unfortunately it is necessary to inform you that even if you purchase in 10 interest-free installments, you will not only get back the R$$10,000 that you requested. This is because all credit cards have so-called Extra Fees.
Extra charges
Even if you buy in interest-free installments, remember that credit cards have some extra monthly fees. Although these amounts are not that high, they will increase your payments by a few reais. And remember that if you buy 10 months, these extra fees will be applied each month. They will not be paid just once, but 10 times.
So if you buy something for R$10,000 in 10 interest-free installments, you won't pay R$1,000 per month as you'll have to add the maintenance fee.
For example: if you bought something for R$10,000 in 10x of R$1,000 with monthly maintenance of R$500, you will pay R$1,500 monthly and not R$1000, as you thought when you bought it in 10x interest-free installments. In total, you will pay R$15,000.
The only way to avoid overpaying is to buy without fees. In other words, use your credit card to buy something and pay the full amount at the end of the month. There, you should always buy after being charged. This way, you don't have to wait so long to enjoy what you want if you don't have the money at the time, but you are sure to have it at the end of the month.
2) Revolving interest.
This interest is applied to your credit card bill every time you “DO NOT PAY THE FULL BILL” of your monthly payment. It is more expensive than interest rates and increases what you owe. In other words, when you do not pay the full amount of your credit card on the monthly bill, the remainder is added to the following month’s bill and interest is added to this amount.
3) Interest for advance payment.
It is usually the most expensive of the three and is charged every time you transfer money from an ATM with your credit card. For this reason, it is advisable that you avoid, as far as possible, except in cases of extreme urgency, withdrawing money from your credit card, as you will not be able to earn interest on anything.
And be careful, if you can no longer avoid asking for an advance on your credit card, calculate how much it will be, because the worst thing you could do is spend money twice because you didn't calculate how much you needed. If you decide to transfer R$$50.00 and you don't have an extra R$$30.00, you will have paid (the amount may vary from bank to bank) an additional R$$14.00 for the final R$$80.00 that you handed over. Think about it and if you need R$$80.00, it is better to withdraw this amount only once and then return R$$87.00 and not R$$94.00.
This interest appears on your account statement. Not all entities charge the same amount. In other words, some credit cards are cheaper than others.