Overdraft facilities encourage many consumers to use the pre-approved limit as an income supplement. As dangerous as it is simple, practice can lead a straightforward path toward over-indebtedness in a short time.
Fortunately, it’s not a way back: with a good deal of discipline and the right strategy, you can reverse the picture and stop using overdraft as a closing aid every month. . Want to know how to pay overdraft debts? Follow this article!
5 Tips for Paying Overdraft Debts
1. Evaluate 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 get the overdraft, it is very likely that you are spending more than you can without realizing it.
To glimpse a true picture of your savings, you need to cultivate some good habits in financial education. Writing down expenses is an essential practice for those who want to get rid of debts.
Make a note of all expenses currently for a certain period. With the numbers in hands, compare your expenses with your earnings and see how much you can save to cover the overdraft.
At this point, you may be surprised by certain seemingly harmless spending that causes considerable damage to your finances. Make appropriate adjustments to get rid of your debts more easily.
2. Replace debt with cheaper one
If you have been using the limit for some time and see short-term prospects for change, consider replacing the overdraft with another debt.
Along with the credit card, overdraft is one of the highest interest rates on the market. Therefore, there is a good chance that the options you are researching are better than overdraft and credit card.
It is possible, for example, to borrow for the specific purpose of covering the overdraft limit. Among the existing options, payroll is one of the most advantageous, since interest is more affordable than in other modalities.
After you take out the loan and settle the debt, be very careful not to go over the line again. Should such a situation occur, you risk accruing overdraft interest with the installments of the loan, which may be complicating your financial control.
3. Renegotiate debt
It’s worth talking to your account manager and trying to reach a deal. Although the bank is not required to accept a renegotiation proposal, the fact is that default does not benefit either party. Therefore, it is possible for you to come to an agreement.
When looking for the bank, bring a concrete proposal. Make a prior assessment of your finances and propose conditions that are really within your means. Of course, the chances of a deal will be greater if there is transparency.
4. Make credit portability
Even though renegotiation does not progress, you still have an asset to use in your favor. If the situation is unsustainable, credit portability can be an interesting way to get a debt relief.
Portability allows you to transfer your operations to a financial institution of your choice. Thus, there is a possibility to find a bank that covers more affordable interest and transfer the debt there.
When getting a relief, keep in mind that the ideal is to get out of the overdraft limit once and for all. Enjoy to save and settle debt definitely.
5. Sell some of your goods
If the alternatives presented are not enough for you to pay overdraft debts, a drastic solution may be to sell some of your goods out of the red.
While not an enjoyable exit, the option may allow you to start over with new breath, without stifling doubt and aware of the benefits of good financial planning.