Most of the financial proposals created by various banks can worsen family debt, warns Deco.
Deco Proteste warned that the proposals financial institutions created by several banks, for the support for the effects of bad weather are mostly based on hiring new loans, which can “aggravate family debt”.
In a statement, the organization explained that, following Storm Kristin and the damage caused to homes and essential goods, it “analyzed the financial support proposals created by several banks to respond to the immediate needs of the affected populations”.
The entity’s main conclusion is that “most of the solutions presented are based on taking out new loans, which can worsen household debt at a time of particular financial fragility”.
According to Deco Proteste’s analysis, even though some institutions “present temporarily more favorable conditions, such as exemption from commissions or interest rate subsidies for limited periods”, these solutions end up “translating into new credits that will have to be repaid”.
On the other hand, several of these proposals are “conditional on a prior relationship with the bank”, that is, in many cases, they are addressed only to clients of the institution itself.
Deco Proteste highlighted, however, “that the panorama of the panel’s responses is not closed”.
“Financial institutions have been monitoring the evolution of the situation on the ground, so new solutions may emerge which have not yet been publicly disclosed on the respective websites or official channels”, he highlighted.
Deco Proteste’s analysis focused on the proposals published, until February 5th, by the Caixa Geral de Depósitos, Millennium BCP, Santander, Novo Banco, Abanca, ActivoBank, Crédito Agrícola and Bankinter.
The organization argued that consumers “should carefully analyze any credit proposal, not limited to the monthly installment, but evaluating the total cost of the loan, namely through the APR” (rate that measures the total cost of a credit for the consumer, expressed as an annual percentage), as well as the conditions after the initial bonus period.
Deco Proteste recalled that “there are public support measures and mechanisms such as the legal moratorium on credit for own and permanent housing”, which can, in some situations, be “less penalizing than taking out new loans”.
Deco Proteste advised consumers that, before proceeding with any financing solution, “confirm with your bank if there are specific solutions for your specific situation, even if they are not publicized”.
Furthermore, the entity appealed to consumers to “compare proposals from different institutions and not limit themselves to the bank where they are already customers” and analyze the total cost of credit and not just the temporary reduction in installments.
Deco Proteste also advised that “consider, whenever possible, alternatives to resorting to new debt”.
