Credit cards are a convenient tool that allows you to make purchases using bank money. Many credit cards are characterized by a grace period – a period when the borrower can use the overdraft limit without paying interest.
But often a situation arises when the card user cannot assess his financial capabilities and he has a debt to the bank on a credit card. Since such a loan product is inappropriate and does not have collateral under it, then for a banking company it is considered high-risk, because of this, the interest under the agreement can reach 20 and even 50% per annum.
Therefore, it is advisable to try using a credit card restructuring or refinancing service.
Debt restructuring.
Restructuring implies an additional agreement, on the basis of which the borrower will no longer be able to use the card; instead of this, the bank issues a loan with a monthly payment schedule for the amount owed.
As a rule, the interest on restructuring can be significantly lower than on the card product. They can vary from 8 to 19% per annum, which will significantly reduce the amount of monthly payments and the total overpayment under the contract.
This procedure is easier than refinancing. It is carried out within one bank without the board of third-party banking organizations. To carry out restructuring, you should contact your bank and write an appropriate application.
Credit card debt refinancing.
Refinancing in the banking sector is commonly referred to as debt refinancing. This is a type of targeted loan, the purpose of which is to pay off existing debt. This is an interbank operation, when one bank pays off the debt of its client by issuing a new consumer loan to him.
To complete such a transaction, you must choose a suitable program in any bank you like. It is worth preparing information about your bank card in advance:
certificate of the amount of current debt;
interest rate under the contract;
bank account number for crediting funds.
This information will need to be transferred to the bank, where the refinancing procedure is planned. If approved, the banking company will transfer the money to pay off the debt on the card and issue an agreement with a fixed payment schedule.
Since this is a targeted type of lending, the borrower will have to write an application for closing a credit card after replenishing the card account, and after a while receive a certificate of absence of debt and transfer it to his new bank.