Interest rates are a percentage charged on the total amount you borrow or save. That's why even the slightest variation in interest rates can have a big impact. Therefore, it is important to be aware when they rise, fall or remain the same, to avoid big surprises.

What is the Selic rate?

According to the Brazilian Central Bank, the Selic rate is defined: as the adjusted average rate of daily financing calculated in the Special System for Settlement and Custody (Selic) for federal securities. For purposes of calculating the rate, daily financing related to transactions registered and settled in the Selic and in systems operated by clearing houses or providers of clearing and settlement services are considered (article 1 of Circular No. 2900, of 24th June 1999, with the amendment introduced by article 1 of Circular No. 3.119, of April 18, 2002)...

Now, understand more the interest rate:

● Simple

Simple interest does not change over time. Therefore, this fee is applied to the initial value, but it is not a common practice in the financial system.

● Compound

 Compound interests act on the principal amount of the operation already adjusted with interest and are more common in financial operations. Mainly when it comes to loans and investments. This type of rate is also known as “interest on interest”, which can change every month.

● Moratorium

Os Moratorium interest are charged on the outstanding amount and increase according to the delay in payments. Therefore, there is a daily charge for this interest. So, the longer a person takes to pay off the debt, the more interest will be paid.

● Nominal

Os Nominal interest consider the time and price to be able to account for the size of the interest. In addition, it can be expressed monthly, quarterly, semi-annually or annually, and usually as a percentage. However, it is important to emphasize that it is not the time that will tell if it is nominal or not, but what is expressed in the contract.

● Real

Os juros reais are an indicator used to determine the actual profitability of a loan. Thus, for banks, this rate indicates how much profit the bank actually made by lending money to customers.

● Revolving

Os Revolving interest occur when the credit card holder pays less than the total bill and then the remaining amount goes on the next bill and interest is charged. If you do not pay, again the interest total goes to a new invoice, which incurs even more interest.

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