Minimum payment on credit card or installments?

What's the best option? Minimum payment on your credit card? Installments? Not paying the bill at all? Read on to find out!

The month was tight, you didn't make a financial plan, and when it was time to pay you realized you wouldn't have enough money to pay off your credit card bill? 

What now? What should I do? Pay the minimum amount or pay in installments?

What's the best alternative? Read the text and find out!

How does the minimum payment on a credit card work?

The minimum credit card payment is listed on your statement and refers to the minimum amount you can pay toward your debt. 

For example, if the invoice is for R$200.00 and the minimum payment amount is R$20.00, you cannot pay an amount below R$20.00.

However, you can pay any amount above R$20.00 or the total invoice amount. 

Until 2018, the minimum installment was limited to 15% of the total invoice amount. However, the rules have changed, and banks can now determine the percentage they want.

Each bank's percentage may vary depending on different factors and each customer may have a different percentage, since the customer profile and risk of the operation are also considered. 

In many cases, some people pay an amount above the minimum, but below the exact amount of the invoice, thinking they are doing something good, or that they are reducing their debt as much as possible.

Really? 

What happens when I pay the minimum invoice amount?

When you make the minimum payment on your credit card, you're charged revolving interest. This interest rate is among the highest in the financial market and is one of the main causes of debt among Brazilians.

You won't have your card blocked or be considered in default; revolving credit works like financing.

The amount you were unable to pay will be charged on your next bill plus interest, and you will also be charged a late fee. 

The interest rates on revolving credit are so high that next month, it will be even more difficult to pay off the full amount of the bill, so you end up falling into a never-ending snowball.

In fact, the bill may even be the same amount or higher than before, due to the addition of revolving credit and other fees.

This is one of those cases where you get what you pay for, and a lot.

Therefore, it is not worth doing the minimum credit card payment. 

How does invoice installment work?

If you pay the minimum amount on my credit card bill It's not the best alternative, so should I opt for installments? 

The option to pay your bill in installments has been mandatory since 2020, according to the new regulations of Bacen. Previously, banks only offered this service if they wanted to.

Installment payments emerged as an alternative for customers who cannot afford the full amount of the invoice to avoid revolving interest.

However, despite this, it is not a good solution either, since there is also an increase in interest and other fees on the installment amount.

Minimum payment on credit card or installment plan? Which is the best solution?

Of course, the best option is to pay the full amount of the invoice on time. However, if this isn't possible, defaulting on the invoice isn't the right option. 

You will have to choose between the minimum payment on credit card or installment of the invoice.

After all, what is the best alternative.

As already mentioned, revolving interest is one of the highest on the market, so in most cases it will not be the best alternative.

With installment payments, you get fixed payments plus interest, which is the lowest if you pay the minimum. In this case, it becomes the most viable option. 

Avoid paying in installments to avoid paying more interest and being stuck with this debt for a long time.

Also, do not use the available limit on the card until you pay off this debt. 

Another alternative to avoid falling into the revolving credit trap is to cancel the card and negotiate the amount of the debt.

To do this, you must contact your card issuing bank.

Which credit cards have the lowest interest rate on revolving credit?

When choosing a credit card, we should research and choose the options with the lowest interest rates, in case we need to use services with this added cost. 

In this topic, you'll find some card options with the lowest interest rates on revolving credit. Check it out!

1. Digio

This card deserves to be first on our list because it's the only one that doesn't charge revolving interest. 

Furthermore, there is no annual fee and the interest on installments is lower.

You can pay your card bill in up to 12 installments if you are unable to pay the full amount.

However, control your expenses to fulfill your obligations as a consumer correctly.

Other advantages of the Digio credit card:

• Cashback on partner sites;
• Pay money on the invoice to those who refer friends;
• Contactless payment;
• Virtual card;
• Livelo points program;
• Personal loan;
• Discounts at partner stores.

2. Inter Card

Inter charges a maximum monthly fee of 14,09%, a mid-range percentage. The credit card has no annual fee and offers international coverage. 

With it, you also earn cashback on your purchases and even when paying your bill, for example.

Other advantages of Inter card:

• Free withdrawal;
• Contactless payment;
• Virtual card;
• Accepted in the main digital wallets on the market.

3. BMG Card

The interest rate on BMG's revolving credit is around 9.02%. Furthermore, it has no annual fee. 

You also earn cash back on your bill and join the Benefits Club with exclusive discounts.

Other advantages of the BMG digital account card:

• International Coverage;
• Mastercard Benefits;
• Discounts in pharmacies;
• Unlimited withdrawals.

4. Banco Pan

This bank charges a maximum fee of 11,81% for this service. The card has no annual fee, and its digital account is also free. 

Other benefits of the Pan card:

• Pan Mais points program;
• Mastercard Surprise;
• Go with Visa;
• 100% discount on joining any Coobrastur plan;
• 6 free monthly payments at Veloe;
•  Discounts from partners.

On the BCB website you can find the complete table of interest rates applied by registered banks. 

There are banks that offer lower rates, but many only sell payroll or cooperative cards. 

Conclusion

As you can see, between the minimum payment on credit card and the installment of the invoice, the ideal is that you choose the second alternative.

This is because the incidence of interest is lower and the installments are fixed.

However, it is very important that you control your expenses so that the amount of the bill does not exceed your budget and, therefore, you have to be between a rock and a hard place.