Thursday , January 28 2021

Cards: the best and worst options to cancel debts

In a situation of economic crisis in which credit card use is increasing, card payments may be deferred and the debt may eventually become unexpected. Indeed, during 2018 there was already a sharp increase in the amount of loans ordered to pay debts with cards: in Fintech Afluenta, the number of applicants grew by 31%, with a Total Total Financial (CFT) of 145%, and in Wenance the increase in applications was 20%, with a CFT of at least 168%.

In addition, due to the economic crisis, payment in installments with a credit card has already led to the use of cash or debit to use it as basic as some supermarket, who contribute to increase the normal monthly debt further. According to data from INDEC, the total purchases in supermarkets made in August, the cash payment (34.9%) exists over the credit cards (32.8%), but it was reversed in November 34.4% and 37.4%, respectively.

In this scenario, what should be done then if the debt with the card goes wild? The main alternative that analysts recommend is to request a loan, but compare the rates, CFTs and the terms offered in relation to the plastic. Afluenta CEO Alejandro Cosentino says that the advantage of asking for credit is that the rates that can be obtained are generally lower than those, which raises about 25% more, usually the the terms can be extended.

When asking for a loan, say analysts, the key is to do it before going to cut off the card, as the delays are more costly to get money. It is important to avoid collecting arrears because the delivery letter is good behavior to accept any credit. If one month is suspended but the second installment has not yet expired, there is time to ask for credits, for example, of any finest, usually allowed within 48 hours, says Cosentino.

The problem comes immediately when someone accrues two or three arrears in payments: as the risk of default is very high, in this situation it will be very difficult to get money or get it on very high rates. In these cases, credit scores indicate that there are likelihoods of 30% deficits, which is why banks run and many high rates charge a high charge, up to more than 500%, says Cosentino. Nor will he respect subjects with minimal payments on their wages: no-one will want to lend someone who accumulates at least $ 25,000 but earns $ 30,000.

In these cases of serious arrears, then the options that are waiting are not much: you should try to negotiate with the creditor or, if you give the time and & # 39; The baked, reorganize & money to cancel the debt with your own savings. In the first case, analysts argue, the renegotiation does not guarantee anything, although the banks can sometimes put credits if someone is about to come to Behind, they do so depending on their credit policy and how their offensive portfolio comes in recent months. .

On the other hand, some options to settle the debt mentioned by the experts are looking for alternative funding methods, such as pay developments, or even selling some saved dollars, to analyze if An opportunity to wait for an increase in the dollar during this election year.


On the other hand, the option that the experts do not recommend to pay for the debt with the card will be refined with the plastic itself: they do that , of the total payment, 5% enter the minimum payment and that the remaining 95% are refinanced with CFT that is usually more than 100%. According to Cosentino, the unused card payment can take about two years, and then pay the variable rate loan for 24 months when a loan comes at a fixed rate and maybe with a longer term.

Indeed, according to CEO Wenance, Alejandro Muszak, the card business has earned exactly the lowest payments. The Exchange Fee, the charge that is applied to the total purchases when it is paid to the season, is only 1.75%, which is necessary to reduce the expenses processing. Clearly with the lowest payments the cards earn a lot more, but this gives the credit profile of those who need to fund themselves, he says.

An option that experts do not recommend to pay for the debt with the card is refinancing with their own plastic: they hold that, from the total to pay, 5 % goes into the lowest payment and that the remaining 95% is refined with CFT usually more than 100%
An option that experts do not recommend to pay for the debt with the card is refinancing with their own plastic: they hold that, from the total to pay, 5 % goes into the lowest payment and that the remaining 95% is refined with CFT usually more than 100%

Another analytical and analyst option uses the overdraft, whose rates are much higher than in credit cards. According to Jose Luis Rojas, the Commercial Manager of Solving Your Debt, the difference in rates between the two instruments is high: If the card pays, for example, an interest of 10% per month for a credit of $ 20,000 , that is, about $ 2,000 per month, with the finding able to reach up to 40% or 50%.

In addition, for analysts the overdraft and cards have a risk of being at a variable rate and can be cut at any time as a source of funding: they ensure that the latter occurs in 2018, when there are several entities break their clients' lines of finding and restricting the cards.


In order to avoid falling into complex debt situations, Rojas said that the main thing is to understand debt cases, which may be because a person does not know exactly how his credit card works, how to treat it, or because it does not have the general control and order of your expenses.

In this sense, I will need to make a budget that divides 70% between the essential costs (rent, school, health, etc.) and the remainder offsets to pay off debts, save, and for some entertainment. It is also very important, he says, to have an emergency fund that equates to 6 months' pay for any event, in case you lose your job. And also, consider that refinancing for another credit should be an event only, as the constant income gap and expenses create an endless ball that creates many extra expenses that are of interest.

On the other hand, in terms of expenses, the account summaries must be analyzed to clearly identify what is being spent, cutting down the amount and the rates to which it is. After this, a tough plan needs to be drawn up which, among other things, reduces anti-social expenses, such as taxi trips, and immediately eliminates or restrict funding instruments, such as the credit card.

This needs to be added to keep detailed control of all purchases, says Rojas, because when decisions are made in six or twelve installments, "you can lose the idea of ​​the time and It will take it to pay for a specific product and in the middle of the season you will often make new ones buy in high quantities ". To do this, it can help keep receipts for everything spent and for purchases whose payment lasts for many months.


In each of these, it is a key to monitor the use made with the cards, as Cosentino tends to cast out; because they feel that that does not spend a lot of money, but that they have done the use and at some point they will arrive.

A very common mistake, says Rojas, does not know how a credit card works, something that is derived from reading a statement of account to understand which concepts such as the CFT mean and its implications for the cost of credit.

It is also crucial, he says, not to consider plastic as an additional income, but as it is: a payment instrument that gives a certain amount of money that must be repaid. The problem is that many people consider the credit line as a regular income and which affect the actual perception of their ability to pay, he says.

Regarding whether it is convenient to have more than one card, Rojas recommends to avoid it because it makes it difficult to get strict control of expenses. If it's the option to get them, it's always the best to allocate one to the daily and other expenses with larger amounts to crises or major purchases, something that is & # 39; n facilitate tracking expenses.

On the other hand, he said that he was a mistake to pay another card because that caused a debt creation even more than the first one. In the opposite case, Cosentino can deal with several cards can sometimes be a good tool to play with the balances, but always get discipline when dealing with her. (Clarin)

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