How Increased Directed Credit Affects Your Finances

What is happening with credit in Brazil?

According to G1, President Luiz Inácio Lula da Silva has expanded directed credit with lower interest rates during his third term. This type of credit, which includes financing for specific sectors such as housing and agriculture, is rising again, raising concerns at the Central Bank (BC). The BC has warned that this increase in directed credit puts pressure on the Selic, the basic interest rate of the economy, which is currently at 14.5% per year, one of the highest rates in the world.

This type of credit is subsidized by the government and therefore offers lower interest rates than conventional credit. For example, while the average interest rate for directed credit hovers around 9.3% per year, non-directed loans can reach 38.8% per year.

Why does this matter to you?

The rise in directed credit may seem like good news for those seeking financing for home purchases or small businesses. However, the increase in the Selic, which may occur in response to this credit, could make other types of loans more expensive, impacting your ability to finance everyday purchases like a car or home renovations.

For instance, if you need a personal loan of R$ 10,000.00 with an average interest rate of 38.8% per year, you would end up paying around R$ 13,880.00 at the end of one year. On the other hand, a directed credit with a rate of 9.3% would mean a total payment of approximately R$ 10,930.00. The difference is significant!

What can you do?

Given the current situation, here are some concrete actions you might consider:

• Keep an eye on interest rates: Monitor the rates offered by banks and financial institutions, especially if you are thinking of taking out a loan.
• Consider directed credit options: If you fall into any of the categories that benefit from directed credit, such as housing or agricultural financing, take advantage of these opportunities.
• Reassess your budget: With the Selic high, it’s important to adjust your financial planning. Use the 50/30/20 method to organize your expenses and ensure you are prepared for any increases in loan costs.

Connecting with your financial organization

By understanding the impact of directed credit and the Selic on the economy, you can make better-informed decisions that affect your personal finances. ADXIS can help you apply the 50/30/20 method, organizing your expenses so that you can take advantage of credit opportunities without compromising your financial health in the long run.