He is the darling of Brazilians, but can turn into an enemy in times of financial uncontrollability. Yes, we are talking about the credit card! Being able to split your purchases and pay only from another month are attractive advantages. But what to do when you have no money to pay off the entire bill?
At that moment, the dream is over. All the benefits the card offers become the source of chills. And in these cases, an option widely used by consumers is to split the invoice. But can you tell if this is really the best alternative?
To make peace with your credit and keep debt from becoming a snowball, follow the information we brought in this post!
How does the card installment work?
Credit cards are offered by banks or finance companies. Each works with its own interest rates and default rules. Therefore, the first step you should take in case of debt is to contact the bank and learn about the options it offers.
An alternative is the minimum payment: it is usually indicated on the side of total purchases. Many people end up making this choice because it is a simple action. Besides not having to negotiate with the company, that much smaller value right next to the debt is usually quite attractive. But this is not the best option. By doing so, the consumer enters the so-called revolving credit, which has very high interest rates.
Chances are, your card bill also brings your installment options somewhere. In many cases, it is possible to pay in installments only by paying the amount corresponding to the monthly fee you choose, without contacting the bank. In others, it is necessary to talk to an employee of the institution to know the available conditions (interest rate, number of installments, among others).
When does it pay to make this installment?
It’s very easy to be attracted by the option to split the bill, but is it really worth it? In fact, there are few cases where installment pays off.
Expert advice is only to surrender to this possibility to avoid paying the minimum bill, and only if it is not possible to get a cheaper type of credit. A little confused? We explain!
The interest rates charged by credit cards are among the highest in the market, so ideally you should compare rates and look for the cheapest debt. That is, if you can take a lower interest loan and pay the cash invoice, do so. But when this is not a valid alternative and the other option is to enter the revolving credit, failing to pay the bill or paying only the minimum, then the advice is to the installment.
But here is another important tip: minimize the ill effects of debt. Do not be seduced by installments in 24 months if your budget offers conditions to pay off in less time. Analyze the amount and value of installments and choose the one you can afford to pay faster. After all, the more monthly payments, the higher the interest.
In short: under no circumstances ignore payment of your invoice or pay only the minimum indicated. If you can not honor the full amount, negotiate the installment with the bank or seek a loan. When deciding what the installments will look like, just remember to look at the amount to be paid per month – check the total payment with interest.
How to organize to never split the bill?
Borrowing from the card, paying the minimum amount, dividing the payment into monthly payments or taking out a loan to pay off the full price will never be the ideal options from the point of view of financial health. These are alternatives to those who have already lost control. If this is your case, carefully choose the best path.
Losing control of credit use carries many risks, such as increasing debt repayment times, dealing with abusive interest rates, and lowering your score with financial institutions. Therefore, care must be taken.
A few simple tips can help anyone who wants to avoid getting into trouble or wants to organize their accounts after leaving red. The first step, of course, is to focus on repaying installments and getting your budget back in a healthier way.
If your credit card problem is chronic, seriously consider canceling this service. On the other hand, if it was a one-off situation that caught you off guard, you can make peace with it and use it sparingly. Start by registering all the accounts you pass on the card to keep track of your credit limits and possibilities.
Also, avoid making installment purchases and prefer cash payment. Purchasing a cell phone 12 times, for example, can cause you to be disorganized when the value is added to the computer and the clothes you also pay in addition to the market or gas of the month.
If you want to achieve – and maintain – your account balance, evaluate your income and your fixed costs. Also add to this account variable expenses, such as those for leisure. Then review what can be cut or reduced so that you have more money at the end of the month.
Amount saved can be invested in the formation of emergency savings
Having money stored in the bank will be helpful in months when the budget gets tight. Thus, it is possible to pay off your accounts without resorting to loans or debt installments.
In this post, you discovered how it works to split your credit card bill, but you also learned that this is not always the best option. Follow the tips we gave here and change the way you handle money. That way your finances will be healthier.
How about keep studying about it? Check out our credit card conscious material and keep track of your finances!