How to Get Out of Overdraft and Credit Card Debt
You ended the month in the red, used the overdraft “just for a few days,” or paid the minimum on your credit card bill thinking it would be temporary. Weeks later, you realize the interest charged was more than any purchase you made. This feeling is familiar to millions of Brazilians—and it’s not by chance. The overdraft and credit card revolving credit are among the most expensive credit lines available in the national financial system and operate in a way that makes it challenging to escape without a clear strategy.
The problem isn’t a lack of effort; it’s the structure. When monthly interest rates are very high, each passing day increases the debt balance, and the cycle perpetuates itself. Understanding exactly how these charges work is the first step to breaking this cycle. The second is to have a practical and realistic plan to pay off the debt and never rely on these lines again.
This article will show you how each product works, why they are so costly, and what strategies—with real advantages and limitations—you can use to safely get out of this situation.
What These Credit Lines Are and How They Work
Overdraft
The overdraft is a pre-approved credit limit linked to your checking account. When the account balance hits zero and you continue making transactions (payments, withdrawals, PIX), the bank automatically uses this limit. You don’t even need to request it—and that’s where the danger lies.
In 2020, the Central Bank regulated that overdraft interest rates cannot exceed 8% per month. This cap is still in effect. To check the current average rate practiced by the market, visit the Central Bank of Brazil portal at bcb.gov.br, in the section on interest rates by credit modality.
Additionally, since that regulation, banks are required to offer an option to parcel the overdraft debt if the client uses the limit for more than 30 consecutive days. This is your right—and it can be a way out.
Credit Card Revolving Credit
The revolving credit is activated when you pay any amount between the minimum and the total of the credit card bill. The unpaid difference automatically enters the revolving credit, which has very high interest rates.
In 2023, a law limited the revolving credit: if the consumer does not pay off the total bill in the following month, the debt is compulsorily migrated to the mandatory installment plan, with a term of up to 24 months and a regulated maximum rate. Even so, the revolving credit interest—charged in the first 30 days after the due date—remains high. Check the current rate on the Central Bank portal, which publishes monthly averages by modality.
Why These Debts Grow So Quickly
The math of compound interest works against those in debt. In simple terms: compound interest means you pay interest on interest. If the debt balance grows each month and you only pay a small portion, the debt can increase faster than you can pay it off.
An illustrative example (without exact rates, which vary by bank and profile): imagine a debt of R$ 2,000 in revolving credit with a hypothetical rate of 15% per month. In just three months without full payment, the balance would have exceeded R$ 3,000. This exponential effect is real and documented—that’s why getting out requires immediate action, not gradual.
Map Your Situation Before Taking Any Action
Before paying or contracting any product, you need to see the complete picture.
- List all high-interest debts: overdraft, revolving credit, installment plans, personal loans.
- Note the current debt balance of each one (check the statement or bank app).
- Note the monthly interest rate of each debt (this information should be in the contract or bank statement; you have the right to request it).
- Sum your net monthly income and identify how much is left after essential expenses (housing, food, transportation, health).
- Calculate how much you can allocate monthly to debt payment, being realistic—don’t promise yourself an amount that will leave you without money for basics.
This mapping turns a diffuse problem (“I’m in debt”) into something concrete and manageable.
Strategies to Pay Off the Debt
There are different paths to get out of these debts, each with advantages and limitations. None is perfect for everyone—the most suitable depends on your profile, credit history, and income.
1. Portability and Renegotiation Directly with the Bank
All banks are required to offer an installment option when you stay over 30 days in overdraft. You can (and should) call, go to the branch, or use the app to renegotiate the debt in fixed installments with a rate lower than the overdraft or revolving credit.
Advantage: no bureaucracy, no need for approval at another bank. Limitation: the negotiated rate may still be high depending on your history.
2. Credit Portability
Through the credit portability system (regulated by the Central Bank), you can transfer a debt to another institution that offers a lower rate. This is especially useful if you have a good credit history.
Advantage: can significantly reduce interest and the total cost of the debt. Limitation: requires credit approval at the new institution; people with low scores may have difficulty.
3. Payroll Loan (for Those with Formal Employment or Retired/Pensioner)
The payroll loan has much lower rates because the discount is made directly from the paycheck or INSS benefit, reducing the risk for the lender. The maximum rates for INSS retirees and pensioners are set by the government and can be consulted on the Ministry of Social Security or INSS website.
Advantage: generally much lower rate than overdraft and revolving credit. Limitation: compromises future income; those who already have exhausted payroll margin cannot contract more.
4. Secured Credit (Home Equity or Pawn)
Modalities like secured credit with property (home equity) offer lower rates because the asset serves as collateral. If you have a paid-off or partially financed property, it can be an option.
Advantage: significantly lower rates than unsecured credit. Limitation: real risk of losing the property in case of default; involves notarial costs and a longer process. If you are considering using a property as collateral or financing one, also see Financing Property: Know the Minimum Income You Need.
5. “Snowball” or “Avalanche” Method
Regardless of the product chosen to refinance, you still need a method to pay off the installments faster.
- Avalanche: prioritize the debt with the highest interest rate first. Mathematically more efficient.
- Snowball: prioritize the smallest debt in absolute value to gain motivation with quick payoffs.
Both work—the best is the one you will effectively follow.
How to Avoid Falling Back Again
Getting out of debt is important, but avoiding a return is what consolidates the change. Some practical measures:
- Block or reduce the overdraft limit. You can request this from the bank. If the limit doesn’t exist, you can’t use it.
- Set up balance alerts in the bank app to be notified before going into the red.
- Build an emergency fund, even if small. Having R$ 500 or R$ 1,000 set aside prevents unforeseen events from pushing you into overdraft. To understand where to safely and liquidly store this fund, it may be useful to compare options like Treasury Selic and savings—see Treasury Selic vs. Savings Account: Which Yields More in 2026? for reference.
- Always pay the full credit card bill. If you can’t, it’s a sign that the card limit is above your real financial capacity.
- Review your budget monthly. It doesn’t need to be a complex spreadsheet—a notebook or free app will do.
Conclusion: The Path is Possible, But Requires Real Discipline
Getting out of overdraft and credit card debt doesn’t happen overnight, but it is absolutely possible with a clear plan and consistent execution. The starting point is always the same: stop increasing the debt while you structure the exit. This means not using the overdraft during the process and not installment new purchases on the card you are already paying interest on.
The right strategy choice—direct renegotiation, portability, payroll loan, or secured credit—depends on your specific situation. Compare the rates, read the contracts carefully, and if you have doubts, seek help from a professional.
The most important thing is to start. Each additional month in these credit lines has a real cost that goes beyond interest—it compromises your ability to plan for the future, make investments, and achieve bigger goals.
This content is for educational and informational purposes only. It does not constitute investment advice, personalized financial consulting, or legal guidance. Each financial situation is unique. For decisions about debts, credit, or investments, consult a qualified professional or advisor registered with the Securities and Exchange Commission (CVM).
