When you receive a bonus, win a prize or simply realize that you have more cash than you thought, it is normal to start thinking about how to spend it. However, a wiser option will always be to pay the debts you have, especially in a scenario where interest rates have not stopped rising and it is becoming much easier to fall into default.
If you finally decide to allocate the money to pay off your debts, a good way to do it is by choosing the one that has the highest interest rate and highest amount of insurance or commissions from the financial entity, since it is the one that most expensive is coming out.
When making an advance payment
You should not only know that you can no longer be charged a fine or punishment, but that you have several options. One of them has to do with reducing the credit term; another, with the reduction of the monthly fee; and another with the suspension of payments for a certain time.
Many people opt for the option to reduce monthly fees, so that their budget is more comfortable; However, the money you save rarely uses it in something productive, but ends up adding it to the cash you have available.
The term reduction option presents an interesting dynamic
Since by reducing the term, it reduces the number of outstanding installments, so it is saving interest and also the insurance and other commissions that the bank can charge monthly. In addition, month by month the savings will be equal to the total amount of the fee, and that way you can use the money to cancel other debts or allocate it to a savings account that pays you interest for that money.
Find out and think well what option you will request, but always remember that if you have debts to pay, it is better to use the extra money for that and not stop buying more things.