Demystifying fees and interest: how to avoid them or use them to your advantage?

Do you know what they are? rates and interest and how to use them to your advantage?

When you need to go to the market to get credit for financing or any other service that requires credit, the interest and fees usually cause a certain amount of anguish.

Charges are a major part of financial transactions.

Therefore, it is necessary to understand them better and know if it is possible to use them to your advantage.

 In this article, you will learn more about this important subject for those who usually go to the market in search of credit.

Fees and interest: what types of fees are there?

In principle, rates in the financial market are percentages on financial transactions and products. 

In short, they directly influence the cost of credit and the return on investments.

Take a look at some common types of fees in the market:

Selic rate: 

It is the basic interest rate of the economy, influencing all other interest rates in the market.

IPCA:

Broad Consumer Price Index, used as a calculation basis for adjustments to certain investments.

Interbank Deposit (DI): 

Rate used in transactions between financial institutions.

Reference Rate (TR)): 

Used in some types of investments and financing.

Apparent Rate: 

Include inflation for the period in your calculation.

Real Rate: 

Represents the income or cost of an operation after considering inflationary effects.

However, these rates tend to vary depending on the economic context, and are important for understanding the market.

In addition to being able to make informed decisions about investments.

+ What is a multi-currency account and 4 options for using it

Rates and interest: how to use rates to your advantage?

First of all, to use fees to your advantage, you need to know how they work, and put in place practices that maximize their benefits.

Here are some tips:

1. Investments: 

Choose investments that align with your financial goals and the current economic climate. 

For example, if the Selic rate is high, investments linked to it may be more profitable.

2. Loans: 

Take advantage of periods of low interest rates to finance personal or business projects. 

Loans with lower interest rates reduce the total cost of financing.

3. Financial Planning: 

Make a detailed financial plan. 

Evaluate investment options and choose those with the best rates and conditions for your goals.

4. Fee Negotiation:

In some cases, it is possible to negotiate rates, especially for long-term loans or large amounts of credit.

When carrying out this negotiation, you tend to contract financial services and products that are easy on your pocket and can help you organize your finances.

5. Interest-Bearing Accounts: 

Some financial institutions offer accounts with higher returns than savings accounts. They generally yield an average of 100% of the CDI.

Keeping your money in these accounts can generate extra income.

+ 4 digital account options to make your money grow

6. Financial Education: 

Stay informed about changes in rates and the financial market. 

Financial education is a powerful tool for making better decisions.

Finally, it is worth highlighting that financial methods depend greatly on several factors such as your objectives, risk profile and economic situation.

In fact, consulting a financial professional will help you develop a personalized plan for your priorities. 

Rates and interest: what types of interest are there?

There are different types of interest rates charged on the market, see what they are:

Simple Interest: 

They are calculated only on the principal value of the debt or investment.

Compound interest: 

Calculated on the principal amount and also on accumulated interest from previous periods.

Default Interest: 

Fees charged for late payment, such as credit cards.

Nominal Interest: 

They include the monetary correction of the amount borrowed.

Real Interest: 

This is interest discounted for inflation, reflecting the effective cost of money.

Revolving Interest: 

Charged for late payment of credit card bill or for the financed difference.

Interest on Equity: 

Remuneration based on the profit retained by the company, paid to shareholders.

In short, these are some interest rates available on the market, remembering that each one has unique characteristics and applications in the area of finance.

Interest is an essential part of the economy and personal finances, see how you can explore it and use it to your advantage:

+ Learn more about the main types of interest and how they work

1. Investments: 

Choose investments that use compound interest, as they can significantly increase your returns over time. 

Starting early and making regular contributions can help maximize the effect of compound interest.

2. Financial Planning: 

Have a good financial plan. This includes setting goals, understanding your expenses and income, and knowing where and how to invest your money to get the best interest returns.

3. Cash Payments: 

Whenever possible, choose to pay in cash and negotiate discounts. 

This avoids paying interest on financed purchases and can result in immediate savings.

4. Avoid High Interest Debt: 

Avoid accumulating debt on credit cards or loans with high interest rates. 

Compound interest can work against you by quickly increasing the amount you owe.

5. Reinvestment of Income: 

Reinvest your investment income to harness the power of compound interest. This means that the interest you earn is reinvested, generating more interest.

6. Financial Education: 

Continue to educate yourself about finance and investing. The more you know, the better you can use interest to your advantage.

Conclusion 

Fees and interest both are inevitable in the financial market.

But, you can manage them wisely and take some advantages from both.

Finally, try not to get into debt and invest wisely, these are important decisions for a financially independent life for you and your family.