Almost everyone has already incurred debts and got complicated when paying, because more than 60 million Brazilians started 2020 in debt. And you don't want to increase that number in 2021, do you? For this, in these moments it is necessary to be careful not to go into even more debt.

And what is the best option to pay off debt? Some people opt for the revolving card, while others consider the overdraft to pay off debts.

But after all, what is the best option to settle your debts at these times: the overdraft or the credit card revolving? Which of these options do you lose less money on interest?

Brazilian interest rates are the most expensive on the market, so you can't be too careful. It is worth checking the rates of both modalities. Also important changes were made a few years ago that greatly influence the best decision you will make.

It seems like a difficult choice since both options are famous for their high interest rates. But here you stay up to date on everything in the financial world, so rest assured, you won't leave without a solution. Check out!

Understanding how the overdraft works is very important, as 52% of Brazilians entered the default list due to this line of credit. Data are from the National Confederation of Shopkeepers (CNDL) and the Credit Protection Service (SPC Brasil).

And even dangerous, this modality is the most accessed by the population, this is due to the ease of hiring and easy access for consumers. Therefore, the overdraft is often used to supplement the monthly income, for emergencies and also to continue consuming when there is no longer any balance in the account.

The overdraft or pre-approved limit is a line of credit that the bank makes available without you having requested it, from the opening of your checking account.

It works like a loan, although the process of evaluating and confirming the overdraft benefit is not as complex and bureaucratic as a loan. It is usually used for times of financial tightening as a quick fix.

Also known by several other names, the overdraft, in addition to being called a pre-approved limit, is also known as LIS and blue check.

Basically, it works like an auto loan. This happens when the customer uses all the money in his account and so the bank provides a pre-approved amount so that he does not stop consuming. And like any other loan, the customer pays extra for using the amount.

For example, if you have 200 reais in your account and need to pay an amount of 250 on the bank slip, then the overdraft option comes in. In this case, you can choose to use 50 reais from your overdraft, but of course paying later with interest as soon as money enters the account.

Almost like a loan, the overdraft works in such a way that when opting for this modality, the person does not receive a detailed contract with all the fees and financial charges that will be charged. Being a practical and quick option to be requested, so you run the risk of hiring without first planning.

The overdraft limit is defined by your financial institution, considering basic customer information. Usually only monthly income and payment history made at the institution are taken into account. And this facility is the main reason why overdraft interest rates are the highest on the market.

The credit card is a great financial support, we can pay for expensive items in several months, in addition to leaving home with no money. However, this modality can be somewhat dangerous if you don't know how to have discipline in your accounts.

From the moment you don't pay the full amount of your invoice at the end of the month, that's when your problems begin. If there is no discipline, your debts can snowball due to the late fees and interest, usually very high, that the card charges. Getting harder and harder to pay.

The revolving credit is, therefore, a type of credit that can be offered to credit card customers who are unable to pay the bill in full – that is, the full amount of it. 

When the person pays an amount less than the total amount on the invoice, the remaining amount is included in the next invoice – and interest is charged on this outstanding amount. Basically entering the revolving means saying that the customer is paying interest on the amount he was unable to pay.

Therefore, when you pay the minimum amount, for example, the remainder of the invoice automatically enters the card rotary.

And once again, interest on the revolving credit is among the most expensive on the market, so be very careful and always choose to pay your invoice in full and without delay.

With the new credit card rules established in April 2017, it is only possible to use the card revolving once a month. This is because the National Monetary Council (CMN) requires banks to transfer this debt to installment credit, which is a lower interest option.

The rotary seems innocent, when you look at the invoice and see that you can pay an almost minimal minimum amount and that it will not affect your pocket, it seems the right alternative in a financial difficulty. But the truth is that if you are not an informed consumer and do not do some research beforehand about the consequences of this minimum payment, all of this could lead you into an ambush.

For you to have an idea, the average revolving rate is released every month by the Central Bank. In March 2019, for example, the percentage reached 298.6% per year. So, do your best not to get into revolving credit and avoid getting into more debt.

Nothing better than evaluating the best option for your pocket based on interest rates. Follow now the details on the increase or reduction of interest in revolving or overdraft rates.

In 2019, there was a significant reduction in the overdraft interest rate. Which was 312.6% at the beginning of the year, but ended at 302.5% in December, that is, a reduction of 10.2%. In addition, the rule created by the Central Bank at the end of November imposed a limit of 8% of interest per month on the overdraft.

As for credit card revolving, contrary to overdraft, there was an increase in interest rates also in 2019. 2018. This increase made the revolving interest rate the highest among the types of credit offered by financial institutions.

With regard to the light revolving rate, which is the minimum payment on the card bill, there was an increase of 19.1%. The rate at the end of 2018 was 268%, at the end of 2019 the trademark was 287.1%

Knowing the meaning of each of the terms, I believe it was difficult to choose which was the worst of the two. These credits that seem innocent can lead you to default if you are not careful. But we will still show you the best option for your need.

You already know that the two modalities have high interest rates and there are other more affordable credit modalities on the market. But after all, which modality is more worthwhile despite the regrets?

You must be surprised by the exorbitant amount of interest in these two modalities. And although you may be surprised by the interest rate increases on the revolving credit card, the overdraft is still not the best option. That's because the two are the great villains of this story.

That's why we don't recommend you enter either one, as the risk of falling into trouble is almost certain. But of course, if you are confident that you will be able to pay the interest with peace of mind and want to opt for a quick and automatic method, go for the lowest interest rates and use the overdraft.

However, if you want to know other modalities that cover less interest, now we are going to show you the opportunities you have to pay lower interest in other lines of credit.

Draw your own conclusions, after reading this article so far, is it still worth using special credit to pay off your debts?

The answer is simple: run far away! Even if you go through some situation of lack of control or financial crisis and need to apply for a loan to pay off debts, look for an institution that offers cheaper credit.

It's not worth getting wrapped up in a debt that could become a snowball just because it's a practical and quick alternative. The overdraft may seem practical, but it is enough that you hire it for the problems to begin.

And in the end you will be exchanging an expensive debt for an even more expensive one. However, the best thing to do right now is to have financial control and money saved. Because that's the only way you can plan to not depend on the bank, after all, nobody likes to pay interest.

Before spending unduely, get into the habit of saving an amount at the end of the month for an emergency fund. Take care of your money and be prepared not to be caught off guard in unforeseen events.

The credit card is a hand in the wheel for financial life, but it needs to be treated seriously and with a lot of responsibility. When it comes to money, you can't play around, so don't delay your invoices, always pay on time and only spend what you earn, nothing more.

Therefore, the credit card should only be used when you are unable to pay in cash. Therefore, choose to always place your purchases in the smallest possible installments or use the card in your cash option.

Because when you pay a purchase in 10 or 12 installments you are committing part of your income for a period of one year or a little less. But what if in the meantime your fridge breaks down? Will it be possible to pay the debts?

Therefore, the credit card is an option that should be easy.iLit your life in a need and not complicate it further. Therefore, use responsibly.