Nine out of ten Brazilians have considered taking credit at least once. Card is the villain. See how not to get into debt

Nine out of ten Brazilians have already considered taking some type of credit at least once in their lives, according to a survey by Creditas on people’s relationship with credit. Among the options considered, the credit card (52%) takes the lead. This modality, which today can be accessed in a digital version, via cell phone, can turn into a trap, however:

— As the acquisition of goods is most often in installments, people record only the cost of the installment, without fixing the total (to be paid) in mind. In the next purchases, they forget that there are installments to be honored and make new ones, which in a few months leads to great debt – explains Ana Rosa Vilches, director of Projects at Abefin.

The personal loan comes in second place (42%) among the modalities considered by Brazilians when they need extra.

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The survey also points out that the average value of credit card loans, for example, is usually lower: 56% take out up to R$5,000 and, for payment, prefer to make it in a maximum of 12 installments (58% ). The main motivations for seeking this modality are paying an existing debt (26%), household bills (25%) and unexpected expenses (25%). Regarding personal loans, in general, the amount requested is similar to that of a credit card (R$5,000), however, when it comes to the AB class, this ticket increases to an average of between R$20,000 and R$75,000. And, to settle the loan, Brazilians usually opt for up to 36 installments, using the amount mainly to pay some existing debt (40%), pay an unexpected expense (30%) and household bills (29%).

— The personal loan has lower interest rates. Credit cards are the type of credit with the highest interest rates: they can reach 300% per year. Therefore, when your credit card is late, paying it off should be a priority, even negotiating a loan if necessary. This should be ahead of other debts that may be even higher but have lower interest rates – warns economics professor at Faculdade Presbiteriana Mackenzie Rio, Rubens Moura.

How to avoid credit card debt

Source: Tiago Cespe, creator of Cespe Financial Education

Set a limit – You need to analyze what monthly income you receive and how much you can spend per month. Afterwards, just get in touch with the financial institution and ask to stop the card limit at the amount, reserving a small part for unforeseen circumstances. If a fatality occurs in a given month and it is necessary to spend more, it is possible to contact the card central and change the amount.

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Have few cards – If you only receive once a month, have only one salary. The maximum number of cards should be two, for those who have two or more entries in a month. In this case, be careful not to define as a limit the total that can be spent in the month on two cards.

Check the invoice – Through it, you can see what was spent in the month, if any unnecessary purchases were made and that can be avoided in the coming months.

Attention to the type of credit card used – It is possible to negotiate with the operator the unit of the card and even the exemption of the fee. Also, it is important not to pay for services that you are not going to use. International cards, for example, tend to have more expensive annual fees, and some people do, even though they have no intention of traveling abroad.

Check rates before using – In order to facilitate the month’s expenses, some people usually pay everything with their credit card. However, paying your electricity, water and telephone bills with your card is not very advantageous, as administrators usually charge a fee for this type of service.

Avoid the minimum payment – Although the minimum invoice payment option seems to be an auxiliary resource in times of difficulty, it is the main responsible for credit card debt. This is because interest, applied at rates that can easily exceed 300% per year, will apply to the unpaid amount.