The overdraft facilities encourage many consumers to use the pre-approved account limit as a supplement to their income. As dangerous as it is simple, the practice can lead to a direct path towards over-indebtedness in a short time of use.
Fortunately, there is no turning back: with a good dose of discipline and the right strategy, it is possible to reverse the situation and stop using the overdraft as an aid to close the accounts every month. Want to know how to pay overdraft debts? Follow this article!
5 tips to pay overdraft debts
Assess your spending
An effective way to pay overdraft debts is to cut expenses. The more money left at the end of the month, the faster it will cover the account hole. But if you fell into the overdraft it is very likely that you are spending more than you can without realizing it.
In order to glimpse a faithful picture of their economies, it is necessary to cultivate some good habits of financial education. Writing down expenses is an essential practice for anyone looking to get out of debt.
Take note of all expenses strictly for a certain period. With the numbers in hand, compare your spending with your earnings and see how much you can save to cover your overdraft.
At this point, it is possible that you may be surprised by certain seemingly harmless expenditures, but which do considerable damage to finances. Make the necessary adjustments to get rid of debts more easily.
Replace the debt with a cheaper one
If you have been using the limit for some time and do not see prospects for change in the short term, consider replacing the overdraft with another debt.
Along with the credit card, the overdraft is one of the types of credit that apply the highest interest rates on the market. Therefore, there is a great chance that the options you are researching are better than overdrafts and credit cards.
It is possible, for example, to take out a loan for the specific purpose of covering the overdraft limit. Among the existing options, the payroll is one of the most advantageous, since interest is more affordable than in other modalities.
After taking out the loan and paying off the debt, be very careful not to go over the limit again. If such a situation occurs, you run the risk of accruing interest on the overdraft with the loan installments, which can complicate your financial control.
Renegotiate the debt
It’s worth talking to your account manager and trying to reach an agreement. Although the bank is not obliged to accept a renegotiation proposal, the truth is that default does not bring benefits to either party. Therefore, it is possible for you to reach an agreement.
When looking for the bank, take a concrete proposal. Make a prior assessment of your finances and propose conditions that are really within your means. Certainly, the chances of an agreement will be greater if there is transparency.
Make credit portability
Even if renegotiation does not go ahead, you still have an asset to use in your favor. If the situation is unsustainable, credit portability can be an interesting way to achieve debt relief.
Portability allows you to transfer your transactions to a financial institution of your choice. Thus, there is a possibility to find a bank that charges more affordable interest and transfer the debt there.
When getting relief, remember that the ideal is to get out of the overdraft limit once and for all. Take the opportunity to save and settle the debt permanently.
Sell some of your assets
If the alternatives presented are not enough for you to pay overdraft debts, a drastic solution may be to sell some of your assets to get out of the red.
Although it is not the most pleasant way out, the option can allow you to start again with new breath, without suffocating debt and aware of the benefits of good financial planning.
So, did you like the tips? Are you ready to pay overdraft debts?