What the Selic rate is and how it affects your pocket

In a nutshell

The Selic is Brazil's basic interest rate. It is the reference for almost every other interest rate in the country. When the Selic goes up, borrowing tends to get more expensive and saving tends to earn more. When it goes down, the opposite happens.

Who sets the Selic

The Selic is set by the Copom, the Monetary Policy Committee of Brazil's Central Bank. The Copom meets 8 times a year, roughly every 45 days. At each meeting, it decides whether the rate goes up, down or stays the same.

The main goal is to control inflation, which is the general rise in prices. The inflation target is set by Brazil's National Monetary Council (CMN). Since 2025, it has been 3% a year, with a tolerance of 1.5 percentage points either way, checked every month against inflation over the previous 12 months. With higher interest rates, people and companies borrow less and buy less. With less demand, prices tend to rise more slowly.

The Selic value changes over time. To see the current value, check Meu Gasto or the Central Bank website.

How the Selic reaches your pocket

• Loans and financing: banks use the Selic as a base. If it goes up, new loans tend to get more expensive. If you already signed a fixed-rate contract, your installment stays the same.
• Credit cards and overdrafts: these rates are already much higher than the Selic. They tend to follow its direction, but they stay expensive even when it falls.
• Poupança (Brazilian savings account): under Brazilian law, when the Selic is above 8.5% a year, poupança earns 0.5% a month plus the TR, a reference rate. When it is 8.5% or less, it earns 70% of the Selic plus the TR. This rule applies to deposits made since May 2012.
• Fixed income investments: many follow the Selic, such as Tesouro Selic, a government bond. If the Selic goes up, these investments tend to earn more.

Example

Carlos wants to borrow R$ 10,000 and pay it back in 24 fixed installments. The numbers below are hypothetical, just to show the effect of interest.

• Suppose the bank offers 2% interest a month. The installment is about R$ 528.71. In total, Carlos would pay 24 × R$ 528.71 = R$ 12,689.04.
• Now suppose the Selic went up and the bank started charging 2.5% a month. The installment goes to about R$ 559.13. In total, that's 24 × R$ 559.13 = R$ 13,419.12.
• Difference per month: R$ 559.13 − R$ 528.71 = R$ 30.42.
• Total difference: R$ 13,419.12 − R$ 12,689.04 = R$ 730.08.

Half a percentage point more interest per month cost Carlos over R$ 700 by the end of the contract.

Step by step

1. When you hear on the news that the Selic changed, remember that it mainly affects new contracts.
2. Before taking a loan, ask for the CET, the Total Effective Cost. It shows everything you will pay, including interest, fees and insurance.
3. Compare the CET of at least two offers before signing.
4. If you have credit card or overdraft debt, make paying it off a priority. That interest is high at any Selic level.
5. If you have money saved, check whether it is in an investment that follows interest rates or just sitting without earning.
6. Use Meu Gasto's "Ask" feature to see how much you owe today, for example: "am I in too much debt?".

Common mistakes

• Thinking the Selic is the interest you pay. It is just the base. The bank charges the Selic plus its costs and profit. Always look at the CET.
• Waiting for the Selic to fall before paying off the card. Credit card interest stays high even when the Selic drops. Pay it off as soon as you can.
• Thinking an old installment changes with the Selic. Fixed-rate contracts keep the same installment. Read your contract to know if yours is fixed or variable.
• Using an old Selic value in your math. The value changes after Copom meetings. Check the current number before deciding.