How does credit card balance portability work? 

THE portability of credit card balance It is a new possibility to pay off your debts with better conditions.

With this option, you can essentially transfer your debt to the bank that offers the lowest rates. But is it worth it? Who can perform this operation?

These and other questions will be answered throughout the content below, so to find out if this is the financial solution you've been waiting for, keep reading!

What is credit card balance portability?

Since July 1st, the possibility of portability of credit card balance was announced by the National Monetary Council (CMN), as a measure to reduce the number of people in debt in the country.

You've probably noticed that a significant portion of people in debt are in that situation thanks to credit card interest.

Relatively small debts snowball after just a few months of delay thanks to interest, and the lending bank is not always interested in favoring payment terms.

Thinking exactly about this situation, the portability of credit card balance promises to be a solution, since through it it is possible to transfer the debt to a financial institution that offers better negotiation conditions.

This is a good proposal, especially for those who have already tried all kinds of negotiations and have only received rejections or unfavorable proposals from the original creditor bank.

If before the debtor was “hostage” to this situation, with the new CMN resolution, he has the possibility of choosing the best agreement on the market to get rid of outstanding credit card debts.

The idea is that Brazilians will regain access to credit, freeing themselves from abusive interest rates that make their debts practically impossible to pay off.

How do I transfer my credit card balance?

It is important to clarify that portability of credit card balances is not a government program or anything like that, but rather a type of financial product.

So, basically the CMN created a new financial product, which allows new renegotiation strategies through market competitiveness.

So, if before only the original bank could offer negotiation conditions, now other banks can make their proposals, and the most advantageous one for the debtor wins the contract.

That said, to carry out the portability you must, first of all, collect information regarding your debt, including: original outstanding amount, due date, contract interest, and negotiation attempts.

Once this is done, look for other financial institutions to check out offers to negotiate your debt. 

Found a good offer? Then wait, as the original creditor bank will have up to 5 days to submit a counteroffer, aiming for the best offer for the debtor.

If the bank does not offer a counteroffer or if it is less advantageous than the new creditor's negotiation option, the customer may complete the portability.

Once this is done, the new creditor will send the credit amount to the original creditor, and then continue to negotiate the payment of the installments with the customer.

From this moment on, responsibility for the debt passes to the new creditor, and you will have to pay the agreement to avoid default. 

So, in practice, portability works through credit, where the renegotiating bank pays off the debt with the old bank, and passes this “financing” on to the customer/debtor.

++Negotiating debts: see where to start – Valor Notícias.

What precautions should I take when transferring my outstanding balance?

Although it is a relatively new proposal in the market, balance portability is not that difficult to understand.

As we have seen, the new bank basically “assumes” your debt and collects this “financing” through negotiation, offering new terms and conditions.

 But, although it promises good results, we must remember that every new thing piques the curiosity and creativity of scammers.

Therefore, it's important to take some precautions when performing this type of operation. See some recommendations below.

1. Choose a recognized financial institution

As we can see, the choice of the institution to carry out the portability of the outstanding balance of the credit card must be made by the debtor.

So, basically, you contact the new lender, seek proposals and move forward with the portability process.

Therefore, it's important that you prioritize recognized financial institutions in the market, as this will offer you more guarantees.

Many scam companies may guarantee you portability, only thinking about stealing your data or receiving undue payments.

Stay alert and avoid problems!

2. Be wary of SMS and emails

Never attempt to transfer your credit card balance by receiving SMS messages or emails with “unmissable” offers.

It's worth remembering: it's the customer who should get in touch to negotiate, so be wary of SMS messages or emails that discuss this topic.

Most of these communication attempts are made by scammers, and are aimed at improperly accessing your financial data.

3. Evaluate the renegotiation interest rates 

It may seem like a silly tip, but few people pay attention to interest rates when they see the possibility of finally getting rid of the mess of credit card debt.

In this situation, any proposal that frees the debtor from the pile of overdue bills and collection calls every 5 minutes seems highly advantageous.

But be careful, as high interest rates can make your installments difficult to pay, or even prolong your debt for a long time.

Remember to choose the best renegotiation conditions, so that portability of your credit card balance will really offer you advantages.

Especially if you see your score is low or even have financial constraints due to credit card debt, take advantage of this opportunity to get everything up to date and thus regain your financial health!

Read also: What is the ideal credit card limit and how do you determine it? – Valor Notícias.