Practically all of 2020 and so far in 2021 have been very difficult economically for many families. The business closure and the unemployment they affected the incomes of millions of people and the economy has not recovered yet. The Past due portfolio of bank loans has risen to almost 20 percent in Mexico. Many of them associated with Credit cards.
At the end of December 2020, the overdue balance registered by banks in Mexico, between credit cards, personal loans, payroll and durable consumption exceeded 39,272 million pesos. In a scenario like this, carrying debt can get you a lot of financial problems, and the Credit cards they are something particularly risky.
If you are still lucky enough to have a job or a source of income, but you also accumulate debt on one or more credit cards, you have to start putting a limit so that they do not become something unpayable that compromises your personal or family financial stability . Here are some recommendations:
Tips on how to pay off your credit card debt:
1- Make advance payments permanently. One of the sources of greatest profit for the bank that grants us a credit card comes from when we do not make advance payments or when we take time to cover them by the deadline. This generates that each day that passes new amounts of debt accumulate. Therefore, it is important that you do not forget the due date of your payment, but that you do not necessarily have to wait for this date. You can make advance payments to lower your debit balance. Therefore, if you had an amount of money left over or you received a bonus or special payment, do not spend it, or save it. Better put that money in your credit card and get rid of the interests that little by little eat your pocket.
2 – Focus on higher interest debt. As we told you before, it is important that regardless of the cut-off dates, you can make deposits to your credit card debt. However, if you have two or more credit cards, it is essential that you identify which one has the highest interest rate. Remember that you should focus on paying that debt first, because it is the one that is affecting your pocket the most. It should be your priority to pay them to reduce the costs of the interest that the bank charges you, until you pay it off.
3. Use the snowball strategy. Another strategy that you can consider if the difference between the interest rates of your debts is not very significant, is the so-called debt snowball strategy. In this case, you will not be focusing on the largest debt, but on the contrary, you will begin to focus on the smaller debts to pay them off more quickly. The advantage of applying this strategy is that by having fewer open debts you can focus on the large debt, paying there what you previously added to the minor debts.
So that all the above tips can be applied, it is important to start from something as basic as establishing a budget. It is essential that you know very clearly how much money you receive and what you spend it on, to find areas where you can make cuts and put that money into debt.
If you do not know how to make budgets, it is so easy to take a sheet of paper, put your income and then subtract the fixed payments such as housing, food, education, transportation, payments for services such as electricity, water, telephone, internet and others.
From the amount you have left over, identify what you do with that money, trying to find expenses that you could avoid, without affecting your quality of life. That money can be transferred to the payment of your debts.
For more information, follow the My Pocket Credits section.
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