Credit Card Loan: How Does it Work?
The credit card credit will bear interest and may replace installments without fees on longer terms. Know alternatives to save money.
As of March 28, the major banks will offer a new type of financing, the credit card credit. Now, when finalizing the purchase in credit the shopkeeper can offer the options in sight, installments without interest and installments with interest.
The installment of the new modality will be between two and 24 installments and it will depend on the tenant to offer the option with the interest being defined by the financial institutions according to each client.
The Bank of Brazil, Bradesco, Itaú, Santander and Votorantim have already joined the novelty. Nubank will not offer the product.
The tenant will receive the full value of the sale within five days after the transaction. In common installment payments traders receive every 30 days, depending on the number of installments.
As a result, Abecs (Brazilian Association of Credit Card Companies) expects that trade will give preference to this type of credit in larger installments.
Danger of over-indebtedness
The greatest danger of this type of modality is to encourage consumer overspending. Being more advantageous to the shopkeeper (who receives the fastest) and to the banks (who receive the interest), the consumer is the one who will pay the difference.
In practice, interest-free installments can become more difficult to find, and customers with lower incomes and lower credit scores tend to be more disadvantaged.
This may exacerbate the scenario of over-indebtedness, since for products with a higher purchasing power, multi-installment payment is often the consumer’s only option.
Avoid credit card credit
The consumer should avoid credit card credit. In general, easy-to-access credit is often more expensive, as banks need to compensate for defaults.
And remember, even paying the installment fees, the customer will be subject to high interest rates on the credit card in case of default or delays.
This type of credit can only be advantageous if the consumer gets a discount from the merchant in the modality, aiming at which the shopkeeper receives before, this type of negotiation can be made.
Alternatives to Credit Card Credicard
Being present in most major banks, it will be complicated for the consumer to avoid credit card credit, but he still has some alternatives.
The first is cash payment. Traders almost always prefer to get paid and not see a portion if it seems that it never ends at every invoice is always a relief.
Another measure is to encourage competition and buy from those who offer interest-free installments or have cards that do not offer this alternative.
It is also possible to make a cheaper loan. Compare the interest and, if it is cheaper the loan, can be advantageous. In addition, the consumer can request a discount, since for the shopkeeper the payment will be in sight.