Do credit cards have interest? It’s a very common question before applying for a new card. Even because they are responsible for the indebtedness of most Brazilians.
The card is one of the most used payment methods, largely because of the practicality it offers. However, some end up forgetting that credit cards have interest, and then lose control over it.
Therefore, to avoid this situation, it is important that we know that credit cards that have interest can end up doubling the amount of your bill. But why do credit cards have interest? How are they calculated and what can you do to avoid them? Let’s clear all these doubts below.
What this article covers:
Why do credit cards have interest?
You must have already rented something, be it a car, a house, or any other item. You must have paid an amount to the person who lent you the item. That’s fair, as you made use of it.
And that’s why credit cards have interest. Even though you’re not borrowing directly, you’re still making use of money you don’t have, so whether you like it or not, you’re borrowing money from the bank.
Therefore, we can say that interest is the amount that companies charge for the money that was lent to them. Now that we understand why credit cards have interest, let’s see how they are calculated.
How is interest calculated?
The interest rate depends on the amount of your bill and also your card. Let’s say you have an invoice for R$250.00 and for some reason you couldn’t pay it. In the following month you will have to pay this R$ 250.00 along with the revolving interest, the late fee and a daily percentage that can increase according to the number of days you delay the invoice.
If the revolving interest on your card is 10%, the following month you would then have to pay a bill of R$ 282.50. We see with this that credit cards have interest that can make you pay more than you should for something you bought.
What is the interest for payment in installments?
Some people delude themselves into thinking that paying the minimum invoice amount is a good option, but in fact this is an illusion, as credit cards have interest for this situation.
Most of the time, the minimum payment is 15% of the invoice amount. In the other month, the revolving interest, the 2% fine for delay and the 1% that is added for each day of delay will be added to your bill.
So let’s say you have paid the R$ 75.00 of the minimum amount, next month you will have to pay the R$ 425.00 with interest. If the amount of revolving interest is 15%, you will have an invoice for R$ 501.50 next month, with R$ 76.50 of interest.
So, whenever you think about splitting the bill, remember that credit cards have heavy interest for these situations.
What is the interest for late payment of the invoice?
Revolving interest can vary from card to card, but typically they are between 2% and 14% monthly. In addition to the revolving interest, a penalty of 2% for lateness is also added to the invoice, and a percentage of 1% for each day of delay.
How to avoid credit card interest?
We know that credit cards have interest that can get out of control, but they can be avoided. For this, you must always pay your invoice on the right date and avoid paying the minimum invoice as much as possible.
Now we know why the credit card has interest and we’ve seen that if we don’t pay attention, they can get out of hand. So do your best to avoid credit card interest.