Russians are mired in credit card debt: experts name ways to solve financial problems

Is it worth resorting to bankruptcy proceedings?

Credit cards are no longer a panacea for running out of money. Overdue debt on plastic in Russia exceeded 250 billion rubles. Owners of more than four million cards are no longer able to pay monthly interest and continue to gradually plunge into debt. Experts are confident that banks have stopped providing problem borrowers with the opportunity to refinance, hiding their real financial situation from them. The way out for many defaulters may be to declare themselves bankrupt.

Holders of every fifteenth credit card in Russia are unable to repay debt obligations to the bank. According to a study by the Scoring Bureau company, the amount of “bad plastic” in the first month of autumn increased by 2.3% and amounted to 4.1 million units. In monetary terms, the number of cards with overdue debt increased to a maximum in the entire history of observations of 250.3 billion rubles (with a total volume of lending for such a loan instrument of 2.2 trillion rubles). The average amount of “overdue” payments since the beginning of July has been approximately 61.5 thousand rubles.

According to the head of the sales and customer support department at Alfa-Forex, Alexander Shneiderman, borrowers are often themselves to blame for the accumulation of unaffordable debt: many poorly assess their credit potential and, paying for purchases with borrowed funds, cannot adequately calculate how much money they will need to cover immediate expenses , say, in three months.

On the other hand, this situation was to some extent a consequence of the state’s financial policy. “The recent actions of the Central Bank aimed at increasing the key rate are forcing banks to evaluate borrowers more closely. At the same time, banks do not always provide clients in difficult circumstances with the opportunity to refinance and sometimes even hide the real state of affairs from them,” explains Artem Tuzov, director of the corporate finance department at IVA Partners. “As a result, a number of borrowers who easily refinanced at a rate of 7-8%, at a rate of 13%, have lost access to this opportunity and are falling into arrears.” In fact, this year the Bank of Russia has already raised key rates three times – in July, August and September, so in the third quarter interest rates on most loans almost doubled, which contributed to a revaluation of the population’s payment potential.

At the next meeting of the Board of Directors of the Central Bank, scheduled for October 27, the key rate may be raised again – to 14%. Transferring existing debt to other credit instruments will become even more difficult. “The state is unlikely to save borrowers, especially in the context of a budget deficit, worsening geopolitical situation and the escalation of Western sanctions,” says Freedom Finance Global analyst Vladimir Chernov. “The way out of the situation, if there is no desire to further resolve issues of overdue loans with collectors, is to refinance the existing loan, which can be negotiated with the bank.”

According to the expert, if it is impossible to pay monthly loan payments on your own, you can contact the bank and ask it for a loan holiday, which is usually provided for a period of 3 to 6 months. The bank will most likely cooperate, since it is more profitable for it to stretch out the debt over time than to sell it to collectors at a discount. “The client will be provided with refinancing conditions with a reduction in the monthly loan payment amount to values ​​that the borrower is able to handle,” the analyst believes. “You shouldn’t contact intermediaries who offer to “resolve the issue,” as this will lead to overpayments of interest for their services.”

Another reasonable option would be to transfer credit card debt (with a load of 30-40% per annum) to a bank loan for 2-3 years with interest rates of 17-18%. “At the end of the day, the essence of debt is that it must either be paid or repaid,” advises Tuzov. — Since citizens took on the debt voluntarily, the only thing the state can do is to apply to an already organized bankruptcy institution. Now any citizen has the right to file for bankruptcy and thus get out of the debt trap. In the future, a defaulting borrower with a damaged credit history is unlikely to receive new loans.”