Making purchases with a credit card is easy, merchants accept a wide variety of cards and pay in installments often without interest, however the facility also applies to losing control over the debts acquired and not being able to pay them off. If that happens, a good way to avoid having your name negated in the square is to seek debt renegotiation. How to do this? Today we are going to give you some tips for you to succeed and get out of the red.
It’s time to put all debts on paper
This is really necessary for you to know exactly the amount of your debt on the card. Not only that, you also need to know what your essential expenses for the month are, including: water, electricity, rent, tuition fees, etc., in addition to other expenses that can be redeployed, to apply them to the payment of the outstanding balance, as this will help when negotiating the proposal to settle it, without running the risk of accepting a portion that will not fit in your budget.
What if I have more than one card with outstanding debts?
We generally see advice that it is better to pay the card with the lowest debt. This is a mistake. It is necessary to take into consideration which one has the highest interest rate. Check on your invoice, in the “Financing Charges” section, the “Maximum Financing Interest per Month”, there will be the percentage rate that will be charged if the total amount of the invoice is not paid.
Usually the rates vary between one card and another, so it is always better to pay the higher rate, as it will consume more income as the debt is being postponed. Even if you are unable to make a full payment on a card, it is important to pay at least the minimum value of the cards (but only as a last resort!), Instead of suspending all payment, as the fees are slightly lower.
Looking for the lender
When looking for the card provider, it is not necessary to explain the reason for the debt, but to demonstrate your intention to pay it. It is interesting that in your preparation, the moment you put everything on paper, evaluate your condition to negotiate based on your income and expenses.
Contact the company through the customer service center or in person, in a special sector responsible for negotiating debts within the company. If communication with the industry is difficult, try to contact them by other means. Service via social networks, for example, has worked very well.
When negotiating ask for the “Total Effective Cost” of the debt, it is mandatory to provide this information, which will contain the amount to be paid with interest, fees and taxes.
Analyze the proposal offered by the company well
When you are face to face with the lender, explain your financial situation, so that it is possible to reach a good agreement for both. Make your proposal, the company can offer a counter proposal and before accepting, think carefully and evaluate if the suggested agreement meets your needs, so that you do not default again for not being able to sustain the conditions offered.
Is it worth it to take a loan to pay off the card?
Yes, but be careful: only if the interest rate is lower than that of the card. Taking loans from finance companies that accept clients with names in the Agree Bank or Across Lender Group, usually means higher interest. In that case, don’t, the problem will only increase.
If you have been saving money to make a dream come true and are reluctant to divert part of that amount to pay off your debt, the best thing to do is to take part of that amount for this purpose, because then you can ask the creditor for a discount, already which will pay cash and the long-term financial loss will be much less.
If you can’t negotiate, ask for help
If you are unable to negotiate, it is possible to ask for help from some specialized associations such as the Consumer Protection and Defense Foundation (Procon) and the National Institute of Consumer Protection of the Financial System (Andif), they will be able to help you and guide you on the deal.
Avoid contracting new debts, until all that are pending are remedied.
Economists recommend that a maximum of 30% of monthly installment income be committed. A good alternative for those who come out of this situation is to apply part of what they receive in savings, so in case of emergency you will have a financial reserve. Family budget planning can also be combined, which makes it possible to adjust spending according to your income, without losing control.