The card can be a great ally for your finances since used with awareness and responsibility. But, when that doesn’t happen, the lack of control over spending leads to debt and then the need arises to negotiate credit card debt.
If that is your case, then this article is for you. Read on and check out all the tips to get rid of your card debt once and for all.
Why negotiate credit card debt?
First of all, you need to know that the interest on the revolving credit card is the most expensive on the market. According to the Cream Bank, interest rates exceed 300% per year, considered an exorbitant percentage.
Thus, if the consumer is unable to pay the full invoice and opt for the revolving one, he will pay a very high fee on the amount owed and any debt with the card can quickly become a snowball and complicate the entire household budget.
Tips for negotiating credit card debt
1) Analyze your spending
The first step is to understand your finances and what expenses are compromising your budget.
Review the last three credit card bills and see how you have been spending your money to find out the cause of the debt. Mainly pay attention to the amount of small value purchases, as they generally affect our perception of expenses.
Put everything on the tip of the pencil and see what expenses you can eliminate from the next invoices.
2) Negotiate payment in fixed installments
Contact your bank or card operator to negotiate the debt.
Find out about the CET (Total Effective Cost), which is the sum of interest, fees and charges that will affect the amount due.
Request a simulation based on the amount you will be able to pay per month and give preference to fixed installments so you don’t get caught off guard and run the risk of the installment going up as time goes by.
It is important to know that, if your name has been included in any credit protection agency, the bank or the card operator are obliged to withdraw it, as you have sought alternatives to pay off your debt.
3) Ask for help from experts
If the solution presented by the card operator is not satisfactory, use a finance specialist, such as accountants or financial analysts.
Some agencies offer free financial guidance to the public. This is the case of the University of São Paulo and Procon SP.
It is worth the consultation!
4) Exchange the debt
In general, a personal loan has much lower rates and interest than the revolving card or installment of the invoice.
There are several options: payroll deductible loans, advance payment of IR, 13 °, etc. However, this alternative is only valid if done with planning and solely and exclusively to pay off credit card debt .
What you should know when negotiating credit card debt
- The financial institution cannot charge more than 30% of what you receive monthly to pay off the debt. In other words: if you earn 1 thousand net, the total amount of the debt cannot exceed 300.
- Since April 3, 2020, the IOF charge will be zeroed in the next 90 days due to the impacts of the coronavirus on the financial lives of Brazilians. In other words, the tax will not be charged in the case of loans, use of overdraft, revolving credit card and financing.
- You are not required to hire additional services to be able to negotiate your credit card debt. If this is a condition imposed by the financial institution, report it to Procon.
Make conscious use of your credit card
The credit card is one of the payment methods most used by Brazilians and as such, it must be seen as an ally.
For this reason, the recommendation of financial experts is to have a maximum of two cards and always be aware of the day when invoices are due and the sum of the limits of each one.
Taking notes of all purchases and consulting the card application with all the detailed values helps to keep track of finances and evaluate priorities and spending reductions for the coming months.
Remember: the credit card is a financial tool and, therefore, the amounts spent on it must be associated with your budget limit and not the credit limit.