The risks of paying high interest rates

In April 2022, 77.7% of all Brazilian families had some type of debt, as pointed out by studies by the National Confederation of Commerce and Goods, Services and Tourism (CNC). In fact, given this scenario, installments of service and consumer goods have been proving to be the only alternative to closing the account at the end of the month, or for those who had something unforeseen in the month and needed to make those purchases that weren't in the planning.

In this sense, financial educator Aline Soaper warns that, as interest rates in Brazil have been extremely high in recent months, You have to be very careful when taking out a debt in installments., since, depending on the number of installments, this debt can end up becoming an endless snowball. This is theoretically due to the fact that the Selic has risen dramatically in recent months, to 12.75% in the month of May.

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In addition, it is essential to emphasize that in May 2020, the Selic rate was around 3.5%, that is, in around one year the rate increased significantly, more than doubling. Thus, the expectation of the financial market is that the Central Bank, in June, inform a rise of 0.5%, and after that the rate will remain stable until the end of the year. This means that debts made at that time will have high interest rates.

“With high interest rates, the care not to get into debt is even greater. Contracting installment debts, whether on bills or credit cards, can have a snowball effect. The ideal is to keep bills up to date and avoid new purchases on credit, especially consumer goods that can be paid in cash”, says the financial educator.

Geographer and pseudo writer (or otherwise), I'm 23 years old, from Rio Grande do Sul, lover of the seventh art and everything that involves communication.

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