What to do with credit card debt?

Credit card debt can be a source of sleepless nights and can even lead to other consequences. Read on to find out how to get out of debt!

What happens if I don't pay my credit card bill?

The first consequence of not paying your credit card bill is that you end up paying revolving credit interest, one of the highest on the market.

Furthermore, this can lead to you defaulting on your payments and having your credit card canceled.

Not to mention that accumulating debts like this can disorganize your finances and make you seen as a bad payer in the financial market.

All of this will harm you when you need to take out new financial products, especially a new credit card.

To avoid these consequences, it is best to use your card very carefully.

However, if you're already in credit card debt, don't worry! Keep reading, as we'll offer some solutions.

How to get rid of credit card debt?

Leaving your credit card bill outstanding and accruing interest until you have the money to pay it off is not the best alternative.

See below what can be done to resolve the situation!

1. Pay the bill in installments

This isn't the best option, as the interest rates are quite high. However, it's better to pay in installments that fit your budget than to leave the bill unpaid.

This way, you won't lose your card and you won't be in default.

Therefore, if you've overspent and realize you won't be able to pay the bill in full, paying in installments may be an alternative.

However, be careful, keep an eye on the interest and the number of installments, the more installments you choose, the more expensive the debt will be.

2. Negotiate the debt

One of the most common alternatives is negotiation. Contact a financial institution or bank to determine how much you owe and negotiate.

Normally, in a negotiation it is possible to obtain better payment terms, but the opposite can also happen.

For example, the debt is too expensive, the institution or bank requires a high down payment, and the installments don't fit within your budget.

In a situation like this, negotiation may be unfeasible. There's no point in negotiating something you can't afford.

Look for a flexible negotiation or check out the next suggestion.

3. Swap expensive debt for cheaper debt

As previously stated, the credit card debt is the most expensive on the market, so another alternative is to exchange the expensive debt for a cheaper one.

First, you need to know exactly how much you owe, then it's time to look for cheaper alternatives to pay off the debt, for example, a low-interest loan.

Among the most economical alternatives on the market, we can highlight, for example:

Consigned loan;
Secured credit;
FGTS advance;
Loan on energy bill.

Additionally, there is the alternative of taking out a personal loan, however, this line of credit has higher interest rates compared to the alternatives mentioned above.

However, with good research and some simulations, you can find an option that works out cheaper than paying off your debt in installments on your card or negotiating.

What happens if I don't pay my credit card debt?

If you are unable to pay off your debts, even with the suggestions mentioned above, according to Article 206 of the Civil Code, after the five-year period, companies can no longer collect on that debt.

However, the debt doesn't disappear or cease to exist even after it has expired. Although your name no longer appears in Serasa's data due to this debt, it remains in the creditor's data.

In this case, you may not be able to get any financial products from the company.

Letting your debt lapse isn't the best or most appropriate option. Do your best to pay off your debts.

Also, learn how to use your credit card so you don't accumulate more. credit card debt.

See our tips below!

How to avoid credit card debt?

By now you have discovered the consequences of having accumulated debts on the credit card credit, and also learned how to get rid of them.

However, it may be your first time using a credit card and you don't know the most important thing: how to avoid credit card debt?

To do this, it's essential that you know how to use it correctly. Keep reading for some tips that will help you!

1. Concentrate your spending on just one card

How many credit cards do you have?

A survey by Serasa eCred revealed that 471% of Brazilians have four or more credit cards.

Certainly, with the popularization of digital accounts, having a credit card has become easier and more interesting.

However, this data is a warning sign! This is because the more credit cards you have, the more difficult it will be to manage your credit limit and control your spending.

The first tip to avoid credit card debt is to concentrate your expenses on just one card, therefore, on the alternative with the best cost-benefit.

When it comes to quantity, it's a good idea to have just two cards: one for everyday expenses and the other for emergencies.

2. Pay attention to the card limit

The higher the card limit, the greater your purchasing power and the lower your chances of controlling its use.

Therefore, assess your payment capacity and set a limit that meets your needs but is not too high for your ability to pay.

Are you sitting down? I'm going to give you some information that may discourage you, but it's important to follow to avoid further problems. credit card expenses. Check it out below:

For example, if your salary is R$3,000.00, your credit card limit should be R$900.00.

Other than that, It is very important to set a daily spending limit with this item. To know how much you should spend, divide the limit amount by the 30 days of the month.

As per our example, daily spending should not exceed R$100.00.

However, if you have a credit limit that exceeds 30% of your income, check out the following tip!

3. Make a financial plan

To avoid the credit card debt You need to have total control over your expenses, this is only possible with financial planning.

Analyze your earnings and, from there, see how much you can set aside for credit card expenses.

Don't forget to consider your credit card's fixed expenses when making your financial planning.

However, one way to save with your credit card is to choose more affordable alternatives, for example, without an annual fee.

There are currently many great alternatives on the market such as Nubank, Next, PicPay Card and Neon.

By controlling your spending, you won't risk having to request an emergency limit analysis and ending up spending more than you should.

4. Pay the full amount of the invoice

Revolving credit card interest has one of the highest rates on the market, currently averaging 346.3% per year, according to the BC.

Therefore, it is very important to pay the full amount of the invoice and on the right date, this way you avoid increasing your bill considerably. credit card debt.

A valuable tip is to set the invoice due date for a date close to your payment date.

If you receive your payment on the fifth business day, set the due date to the 7th, or at most the 8th of each month.

This way, you don't run the risk of leaving the money saved and ending up using it for other purposes. Once you receive it, you pay it back!

Conclusion

As you can see, have credit card debt It is very harmful to your financial and even mental health, as you become very worried, anxious and stressed because of it.

To avoid these debts, put our tips into practice and use your credit limit with moderation and awareness.

Be sure to follow our blog for tips to help you organize your finances.

Credit Market

Nara 24 de August de 2022