What is credit and how does this payment method work?

What is a credit card? Read the text and learn about the payment method that was widely used by Brazilians before credit cards became so popular.

There are many financial services that help us achieve our consumer dreams, and they also bring many benefits. 

When paying for desired items, the payment method makes a big difference. For example, when paying with a payment slip in installments, there is no need for a credit card.

With credit card payments you can earn cashback, miles, and discounts at partner stores.

Credit, in turn, is a great option for those with a low score, but after all, you know what is credit?

Read our text and find out! See below the subtopics that will be covered in this text:

• What is credit?
• How does it work?
• What is the difference between a credit plan and a credit card?
• How do I pay my credit installments?
• Advantages
• Disadvantages
• Interest rate
• Who can take out a credit plan?
• Which stores have their own credit?
• What do you need to make purchases on credit?
• Can someone who doesn't have a registered job get approval?

What is credit?

The credit plan, also known as a booklet, has already helped thousands of Brazilians to acquire various items, especially household products.

It was once a very common form of payment in Brazil when credit cards were not accessible products.

Therefore, the credit was the only way people found to acquire goods and pay in installments, thus, thousands of Brazilians who were unable to buy items in cash saw their purchasing power increase.

The credit system stood out for being simple and bureaucracy-free, some stores made it even easier to approve this payment method when applicants were already frequent customers, it was a way of making the operation safer for the store and financial institution involved.

With the ease of credit card approval for this audience, installment payments ended up losing ground and are currently no longer one of the most used payment methods by Brazilians.

However, many people still use this financial product, especially because it is simple and bureaucracy-free.

How does it work?

It works like financing for goods and services. You can request it at a bank, financial institution or directly at the store where you want to purchase a product.

Not all stores accept this form of payment, so before choosing products it is important to check whether the establishment accepts credit.

When you request it, you will go through a credit analysis, just like when requesting any other financial product, however, it is more flexible.

The installments of the credit plan are fixed, they are already presented to the customer with the addition of interest and monetary correction.

Therefore, you leave the store knowing exactly how much you will pay until the end of your debt.

As already mentioned, many stores do not accept or have stopped offering this form of payment and have started selling the store's credit card.

Some have both products and the customer can choose the one that best meets their needs.

What is the difference between a credit plan and a store credit card (Private Label)?

The store credit card is also easy to approve, as is the installment plan, however, it can be a more advantageous option.

Among the differences between these two forms of payment, we can highlight that, with the store card, despite being able to pay in smaller installments, it is possible not to incur interest on the installments or lower fees.

In credit, in turn, there is no way to escape interest, the only difference is the percentage being lower than in revolving credit.

Furthermore, the credit card is more limited and does not offer any benefits. The private label card offers benefits, discounts, cashback, and in some cases can be used in other stores.

You will certainly have more freedom, greater purchasing power and more control over your spending.

Finally, it is worth highlighting the limit, the credit plan does not have a pre-determined limit, every time you go to the store to purchase an item, it will undergo an analysis to see if the purchase limit will be approved.

If you have already purchased from the store, you may have financing approved more easily. However, if you have a bad credit rating, for example, your chances of getting approval decrease.

In the case of the store card, you already receive it with a certain limit and you can increase it as you use the card.

Even if your credit score is bad, you won't lose the limit you already have, unless you don't pay the store, in which case the card limit will be blocked.

Speaking of which, some credit cards have an extra limit called: credit card installment.

With this extra limit you gain even more purchasing power., this is because you can pay for your purchases in installments and the interest rates are attractive.

How do I pay my credit installments?

The installment plan is paid in installments, basically a set of bills. Generally, the customer receives the installment plan corresponding to each month's installments, and simply pays them and highlights the ones that have already been paid.

Bills can be paid at lottery shops, bank branches or even at the store where you purchased the product.

Additionally, you can pay using your bank's app. It may happen that some institutions do not accept payment of the bill through the app, so try the previous alternatives.

So, are you enjoying knowing what is credit and how does this payment method work?

Keep reading, as there is still more to discover!

Advantages

One of the main advantages of credit is the increase in purchasing power, this is because You can purchase a much-desired item and have more time to pay.

In fact, some stores offer payment in up to 48 installments, which will give you more time to pay and settle the debt without compromising your budget.

If you are having difficulty getting a credit card, you can try purchasing items on credit, as it is simpler and easier to approve.

Check if your bank is a partner of any store and get this type of financing, if you have a good financial relationship with it, it will certainly be much easier to get through. credit analysis.

Although it is not the most recommended financial service, in a moment of urgency when there is no other option, credit can be very advantageous, as long as it is used with caution and intelligence.

Disadvantages

What can be an advantage, if not used with caution can become a disadvantage. 

Because you have a lot of time to pay for your purchases in installments, you may end up having trouble paying your bills.

Furthermore, you are stuck with debt for a long time, not to mention that interest can increase depending on the number of installments.

Therefore, do your best to divide it into small installments, but without compromising your financial planning.

With this financing, it is very easy to lose control and end up in debt due to this long payment period, because in the meantime you will need to acquire other debts and be in even more trouble.

Just because you pay in 48 installments doesn't mean you need to divide your purchases into that amount.

Carry out an assessment and see the appropriate number of installments so as not to harm your budget, but also not to leave you tied to debt for a long time.

THE credit increases your purchasing power, however, can increase your chances of getting into a large debt.

The world of credit is a dangerous field, any thoughtless action can cause you losses and make you a slave to debt, so you can never be too careful!

It's great to have the freedom to buy and then pay in easy installments, but you should be careful and use credit with caution.

Finally, the last advantage to reinforce is the interest rate. The interest on credit is not the lowest, in fact, it is higher than the interest on a credit card, but lower than the interest on a revolving credit.

Interest rate

The STJ stipulated a ceiling on the interest rate for purchases on credit in retail stores, therefore, it cannot exceed 12% per year, giving 1% per month.

However, credit from financial institutions or banks can reach up to 6%, according to Serasa. BB's interest rate for this product is 3.31% per month.

Before signing a contract, it is essential to ask about the interest rate to find out whether the retailer is being abusive in this regard.

High interest rates can make any transaction disadvantageous and cause you to lose a lot of money, so be careful!

Here on our blog you will find information about the best financial products and also about interest rates, so follow our news to stay informed and not end up at a loss.

Who can take out a credit plan?

Anyone can purchase a product and pay using credit, however, they must meet the necessary requirements to be approved in a credit analysis. 

The main one is to have a clean name, financial institutions, banks or retailers rarely approve this credit model for people with bad credit.

This financing model can be made available to people with low score, but who already have a good relationship with the bank or store.

Other than that, the CPF must be regularized and it is necessary to prove income, but there may be exceptions.

We know that a credit analysis involves several factors, however, having a clean record, proof of income and a good reputation as a payer are great facilitators for approval.

Which stores have their own credit?

Even with the popularization of credit cards, some stores still rely heavily on this form of payment, including to attract customers who do not have credit cards.

Casas Bahia was one of the pioneers in this area, with its credit, it helped thousands of Brazilians to build their dreams.

It currently has a simplified, bureaucracy-free digital account designed for the Brazilian people, Banqi It is already becoming popular among the population.

In addition to Casas Bahias, other large retail companies also offer credit to their customers, for example:

• Magalu;
• Colombo Stores;
• Hundred Stores;
• Marabraz;
• Pernambucans;
• Caedu;
• Torra Stores;
• Point.

What do you need to make purchases on credit?

The simplest way is to go to the store where you want to purchase the products and go directly to the credit account. 

It is important that you already have in mind what you want to buy and what the values are, apart from that, have the following documents on hand:

• ID with CPF number;
• Proof of address;
• Proof of income;
• Two contact numbers for reference.

If you already have a link with the store or another financial product that it sells, for example, a Banqi card or a Magalu card, it will be much easier to get approval for the credit plan.

So, if this financing is approved, you can take your items home and pay in installments.

Can someone who doesn't have a registered job get approval?

Yes. Some stores usually offer these services to housewives, freelancers and independent professionals.

In some cases, people in default may also be able to do so, but it is much more difficult and may be disadvantageous due to payment conditions.

Therefore, if this is the only type of credit available to you, it is important to research and compare before signing up.

As you can see, the stores that offer this financing are similar, with similar product quality and prices, so it certainly won't be difficult to make a smart exchange.

Conclusion

So, did you enjoy finding out? What is credit and how does it work?

It can certainly be an alternative, however, it is not the best option. If you have to choose between paying a bill on credit or with a credit card, the card may be the best option.

However, if there is no other way, use credit carefully, avoid paying in multiple installments and remember to pay your bills on time.

Other than that, research product prices carefully before choosing and see which stores offer more benefits to customers who buy on credit.

Set aside some special time to research and compare. Even if it takes a little work, it can help you save money and make the right choice.

Finally, be sure to always follow our news blog, here you will find a lot of information about the best financial products on the market.

Don't forget to visit us often and check out the latest news in our sections.