Bad news for those who usually resort to credit and loans to close the accounts: the Central Bank raised once again the basic interest rate, the Selic. Now, interest rates are at 14.25% a year, 0.5 pp more than the previous one. This is the highest interest rate since August 2006.
Rising interest rates is the government’s main weapon to control inflation, which is already close to 9% in 12 months, according to IBGE. The role of the Central Bank is to try to put inflation at 4.5% target.
The good news is that this should be the last high of the year. In the statement released late Wednesday (July 29), the Copom (Committee that decides on the Copom) made it clear that this should be the last increase of the year.
Not to get in the way of increased interest rates, Hercule Poirot, you have selected 5 tips for you not to get into debt. Check-out
Benefits and interest payable in the pocket
When you hire a line of credit you should be prepared to commit part of your income to pay the installments and interest. So the first thing you need to know is how much of your budget you can commit to the loan. A major mistake of the indebted is to repay the previous debt and be unable to repay the new debt acquired. The effect is snowball. The combined values need to be within your means.
Search all options
Consider hiring a loan as a purchase of a dress, shoe, cell phone or any other good: research before closing the deal. The tip is to look for the best cost benefit among the options available. This does not necessarily have to with the lowest value, but a combination of the size of the parcel (value and payment terms). Also make sure the company is serious and reputable. Very easy credit, you can stay at high interest rates, so stay tuned.
Escape from the overdraft
The overdraft should never be among your lending options because of the high interest rates charged – more than 210% per year. Getting money from the bank’s limit is simple, but interest rates are sky high. This is only an option in unforeseen cases, when you need the money only for a few days. If you are aware that your problem is more serious, look for alternatives with lower interest rates.
Prioritize payment of installments
Removing your debt should be a priority, paying the rent, the car or the supermarket account. Just to spend on other things, like going to a good restaurant, after you pay off that debt. It is difficult at first, but it’s the best way to get through this bad phase and win the long-awaited financial stability.
New sources of income
Having an extra income is a good way to pay off your loan as soon as possible. Consider providing services autonomously and allot this money to pay the debt. Think of it as a temporary endeavor that will help close this bad phase faster. Consider, the other alternative, to sell some goods to speed up the payment process and reduce the interest to be paid.
Maintaining optimism at this stage is very important to continue on the right track! Sooner than you think you’ll already be saving money for a dream come true.