Although Brazil has many lines of credit for the most varied products and services in the financial market, a major obstacle to the stability of the UK residents are the abusive interest.
They are considered villains because, many times, people do not quickly identify this abusive practice. But, we must not forget the immediate need for money, a type of action that makes us decide situations based on urgency and emotionality, instead of using reason and avoiding future problems.
For this reason, we prepared this article, full of information, so that you can observe the values practiced in the market, identify and avoid abusive interest. Check out!
What are abusive interests?
Perhaps, the concept of abusive interest not known to a large part of the population, but there is a consensus that an annual tariff of 318.7% in the overdraft, and 300% per year, as is the case with the credit card style=”font-weight: 400;”>, are considered abusive interest rates.
The above values were shared by the central bank, in an average calculated over 2021. Even so, we are faced with difficult decisions to honor financial commitments and avoid the accumulation of debts.
In practice, we can define the abusive interest as rates higher than the return that banking institutions receive, when granting a loan, for example. In these cases, the profit exists to maintain the institutions and when the practiced percentages make the customer a victim, we can say that this charge is exaggerated, unfair and abusive.
And interest, what are they?
To complement the information in a didactic way, the interest symbolizes the remuneration due to the one who granted the loan. Generally, they are percentages applied to the total amount of the credit, which reduces the probability that the account holder will not return the amount granted.
Therefore, the overdraft has an abusive interest rate. The convenience and less bureaucracy of the applicants make the companies consider a high risk to accumulate delinquent customers. It is even what happens in Brazil.
How to know if the interest rate is abusive?
There is no precise table that informs us when the interest rate is abusive. However, a search must be made with different types of institutions regarding the credit you are looking for. Here are some examples:
- Large banking institutions;
- Small and medium-sized banking institutions;
- Fintechs, and other specialized companies
With this exercise, you will be able to analyze the mean of the tinterest rate that these organizations offer their customers.
The Central Bank itself is a good source of information, as it constantly updates the average rates offered by financial institutions.
Below are the average interest rates applied to different types of credit, available on the Central Bank's website during 2021:
- Overdraft – 318.7% per year;
- Credit card revolving – 300.3% per year;
- Credit card installments – 175.2% per year;
- Personal loans – 119.5% per year;
- Loan with vehicle guarantee – 17.88% per year;
- Private payroll loan – 16.06% per year;
- Loan with property guarantee – 11.88% per year.
Knowing the market average makes it very easy to understand and know when the interest rate is abusive.
How to calculate abusive interest?
The first step is to read all types of contracts carefully before signing them. Be they about termination with the condominium administrator, Providers, sales overall and even the employment contracts style=”font-weight: 400;”>.
It is also worth questioning the professional responsible for the negotiation and understanding all charges that will be accounted for in your credit offer.
In addition, there is the value expressed in the contracts, which is nothing more than the interest rate added to the total effective cost (CET) of the operation. This makes it easier to understand in advance how much you are looking for credit and how much you will have to pay at the end of the installments.
Another interesting tip is to use the citizen calculator, a tool provided by the Central Bank that simulates the percentage based on the loan data you want. That done, the platform accuses whether the interest is within the law.
How to proceed with the practice of abusive interest?
Assuming you have a credit agreement and have noticed abusive interest, there are some alternatives to pursue your rights and get better payment terms.
Open a revisional interest action and if the request is accepted, the loan agreement may have its charges updated. For this, it is necessary to resort to the Procon or to justice.
Other than that, there is the request for interest portability. This is a change in your credit line for an institution whose conditions are more affordable. It works similarly to the portability of telephone lines and is a consumer right.
Tip: It is possible to demand portability, when the interest rate is abusive and the customer feels injured.
Please contact the bank or financial institution with which you maintain the contract directly and request the statement with the balance due. Both institutions (the old and the current) will exchange the necessary information and you will assume a new debt, with new rates and values according to the renegotiation.
How to avoid credit lines regardless of interest charged?
Do you wish not to get involved with finances? It's simple. Having and maintaining a financial organization helps a lot in evaluating good opportunities when applying for a loan, personal loan or any other type of credit.
For this, we have separated three valuable tips:
- Search a lot and on several sites. But, remember to negotiate only with trusted companies;
- Compare and see what is the average practiced by the institutions;
- Reflect the need for this credit line at the moment,
- Question whether personal financial planning would not be enough to resolve the situation.
Now that you understand the concept, how to calculate and the to do with abusive interest charging, how about knowing more about financial health, human resources and management? Follow the HR Consultants UKy blog and follow our profiles on Facebook, Instagram, LinkedIn and Twitter.