Debt on the Card? Caia Fora | Good Credit
Then the invoice arrived on the card and you have no money to pay … You just entered the so-called Revolving Credit and took a credit card debt!
How to get out of the rotary (credit card debt)?
The end of the month comes, you run out of money and end up spending more than you should on your credit card. And then, when your credit card bill arrives, you are out of money and end up having to make the minimum payment of your credit card.
Who has never been through this situation?
Making the minimum payment on the card, or in the finance jargon, getting on the rotary and getting credit card debt is always a temptation when you do not have the money to pay the bill in full.
Understand why you should stay away from having card debt and why this feature should only be used in emergencies:
- Higher Interest Rates: The rates of the rotary are generally high. Even in the big banks, interest rates on the payroll surpass 10% per month, often reaching more than 15% per month. The Central Bank discloses the list of Banks with the respective average interest rates. In the report of the last week of September 2016, of the 51 banks listed at the Central Bank, only 11 had interest rates of less than 10% a month.
- Snowball Effect: When you make the minimum payment of the credit card constantly makes your monthly payment need to increase, which increases your credit card debt, because when you pay only the minimum amount allowed, the your next month’s credit card bill will come with the unpaid balance of the previous bill plus interest and added to purchases made within the same month. That is, your balance increases and the next month you still have to pay the very high interest for the bank.
- Out of control: Lastly, you have more difficulty planning. If your payment was paid in installments, you would be able to know how much you would spend each month with payment of the portion of the card. Control and planning are key activities for anyone who wants to get off the road and reduce credit card debt.
So what options do I have? How do I get out of the rotary and clear my credit card debt?
APPLY FOR YOUR PERSONAL LOAN
See our 4 tips below:
1- Avoid making the minimum payment and entering the credit card rotary: Avoid, at all costs, entering the rotary. The first step is not to fall into the temptation to make the minimum payment … Always try to make the full payment of the invoice and, when this is not possible, pay the highest possible amount. Preferably, never pay less than 50% of the invoice amount. Thus, you will begin to reduce your debt on the card.
2- Pay your invoice: See if your credit card has the invoice installment option. This option has two benefits: minor interest and planning. As this is a installment payment, you will have the benefit of knowing how much you will have to pay in the month. That is, you will have a greater control of your monthly payment by credit card.
3- Take a personal loan installment and remove the invoice from your credit card:
Research and simulate installment loans at institutions offering personal loans. Here at Good Credit you can simulate loan at various financial institutions and receive offers at no cost . The installment personal loan has rates many times more attractive than the credit card, which already causes your monthly spending to fall with bank interest. But often, even if the rate is close, be sure to consider picking up the personal loan installment. By being a installment loan you will have all the benefits of improving your monthly planning. You get the loan and you already know how much you will have to pay each month, and you can still dilute the payment in several installments, making it easier to control your expenses.
4- Last but very important: Use the credit card in moderation! Always remember that you will need to for debt on the card at the end of the month. So plan accordingly!