How to prevent debts from growing due to inflation?

Inflation in Mexico, the highest in 21 years, is causing greater indebtedness among people due to the intensive use of credit cards to cover their expenses, reported the fintech yotepresto.

“Due to the increase in prices, half of Mexicans use their plastics to settle expenses that they used to do with their normal income, that is, they manage their revolving credits as a salary extension,” indicates the fintech in the Inflation in Mexico 2022 report.

Using the cards in this way, the company points out, causes two problems: it increases the risk of over-indebtedness and the size of the debts increases, since the plastic rates are variable.

Due to inflation, the Bank of Mexico (Banxico) has consistently and constantly increased the reference rate, an indicator that sets the costs to access credit and that directly impacts the rates that banks charge for their credit cards. credit.

In August, inflation in Mexico was 8.62 percent, the highest since August 2000. According to the Mexican Institute of Finance Executives (IMEF), price increases will exceed 9% by the end of the year, affecting the economy of the Mexicans.

According to the fintech yotepresto, 9 out of 10 people say they buy fewer and fewer things with the money they earn, they have changed their buying habits and stopped spending on products and services to make ends meet.

Consolidation, an effective strategy

If you have two or more credit cards or bank loans in force, you can save more than half of interest by transferring or consolidating those debts, that is, paying two or more credits with a loan at a fixed and lower rate.

For example, if you owe 100,000 pesos with a gold or gold card, you would pay around 120,000 pesos in interest to the bank, while with a loan from Yotepresto, with a term of 36 months, you would pay around 25,000 pesos, a savings of more than 95 thousand pesos.

In 7 years of operations, yotepresto has saved around 400 million pesos in interest for its borrowers through its consolidation program. For more information, click here.