CTS: what to do and what not to do with that extra money?

Starting this week workers the formal ones have a supplementary income with the payment of seniority compensation (CTS).

CTS is a reserve fund that can be used after the termination of an employee’s relationship with the company, but a recent law allows you to withdraw 100% of the account. Is it reasonable to withdraw this money?

“It is not recommended to remove CTS because it has a purpose. In case of need or urgency, I could do conclusion but do not take out the TV. To get cts, you have to do a cost-benefit analysis,” said Jorge Guillén, ESAN lecturer.

Experian’s Chief Commercial Officer, Sergio Rivera, agrees that we should avoid the unnecessary expense associated with this extra money.

“We know that additional spending on gifts, food or travel is inevitable as we celebrate the end of the year, so when planning how to use this Money extra is a strategy that we need to put into practice whenever we get new income.” said.

Until the middle of the year, more than 8.5 million Peruvians were in debt to banks and services, so for many, the priority is to withdraw this extra money to alleviate their financial situation.

Javier Gamboa, Rímac financial life insurance and pensions manager, clarified what we need to take into account if we want to write off our debts from KTS.

“What I should do first is rank the debts I have based on what interest rate I have to pay. The first debts I have to pay are credit card debts, which usually have the highest interest rates. then consumer loans, then auto loans, and finally mortgage loans, which are usually guaranteed, these are the loans with the lowest interest rates,” he explained to RPP.

Experts note that another option when withdrawing CTS is to invest in vocational training or in an enterprise, always pre-evaluating the business. But what if we want to change cts to another account type in order to keep it?

“As options, we can talk about term deposits financial institution, from a rustic box. You have to consider performance, you have to compare interest rates, and the reputation of the organization is also important, the other issue is that it is regulated by the SBS,” said economist Dennis Cavero.

The Banking and Insurance Authority (SBS) indicates that currently the interest rate offered by financial institutions on CTS accounts ranges from 0.25% to 7.5%, and the interest rate on fixed-term deposits is up to 7.8% in year.

Please be aware that if you have not yet decided how to dispose of your CTS, there will be a law until December 2023 allowing you to dispose of this employment benefit for free.