Pay off Credit Card Debt Fast! 5 Top Tips to Avoid the Minimum Payment Trap

Updated on 2022.05.31

Whether it is shopping online or in-store consumption, Hong Kong people are used to paying with credit cards. However, this could impose the risk of overspending, resulting in credit card overdraft! When faced with huge credit card debts, many people are unable to repay the full amount due. As the minimum payment amount on the monthly statement is generally only a few hundred Hong Kong dollars, which is much lower than the current balance of tens of thousands, they will choose to pay only the minimum payment amount (min. pay), ignoring the additional interest charges that will incur if you continue to make only the minimum payments. The annual interest rate of credit card debts could be as high as 30% or more. With compound interest, the interest that has to be paid will be getting bigger and bigger! If you are weighed down by credit card bills, it will take at least a couple of years to repay the whole amount. In this guide, we will present you 5 ways to pay off your credit card debts and get rid of the trap of only paying the minimum payment!

Getting Rid of Min. Pay (1) - Earn More, Spend Less

Earn more to repay the debts. You can increase income by changing jobs, working overtime, finding a part-time job and starting a side job, etc. You can also spend less to reduce unnecessary expenses, such as reducing the purchase of fashionable clothes, eating out less, cancelling subscription of streaming service that are rarely used, etc. When you manage to increase your income while reducing your expenses, you can speed up your repayments and say goodbye to the days of making only the minimum payments.

Getting Rid of Min. Pay (2) - Reduce the Number of Credit Cards

The number of credit cards is proportional to the number of purchases to a certain extent. Many people apply for multiple credit cards in order to get discounts on different consumption, such as movie tickets, concert tickets, hotel buffets, etc. You may even forget to repay the amount owed because you have too many credit cards, resulting in additional late charges. In addition, when facing several credit card bills with more than tens of thousands, many people will choose to pay the minimum payment amount only, which makes them fall into the trap of min. pay. Therefore, you have to cancel some of the cards. Firstly, the more credit cards you have, the more likely you are to incur unnecessary expenses. Secondly, cancelling some of the cards can reduce impulsive consumption and help you manage credit card debts effectively. For normal people, having 1-2 credit cards is enough to meet their daily consumption needs.

Getting Rid of Min. Pay (3) - Sort out your Credit Card Bills and the Amount

Whether you have one or more credit cards, when you receive your monthly statement, you cannot help but avoid the countless billing items on your list. It is easy to opt for the minimum payment, thinking you can get off the hook. Yet, you should spend time sorting out the complete card amount due, calculating the principal of different credit cards, the accumulated interest on the number of cards, etc., and then systematically sort out all the card amounts and draw up a card settlement plan.

You can start by asking yourself: how long will it take to pay off all the debts? Can your current income cover the credit card bills? In addition to the monthly minimum payment amount, what is the maximum amount that you can afford? All these would contribute to making a sound plan for clearing your debts.

Getting Rid of Min. Pay (4) - Consolidate the Debt and Repay in One Go

In order to solve the problem of interest on the minimum payment, some people will use another credit card to repay their debts. This method is only a temporary solution, and you will also be responsible for the interest and fees of another credit card.

You can either borrow money from a family member or consolidate the debt with a personal loan.

There are many financial institutions that provide balance transfer loan solutions, which can combine scattered credit card debts into one loan, process the accumulated debts at one time, and avoid the embarrassment of borrowing money from family members. The Low-interest Debt Consolidation Loan of Promise HK sorts it out for you with a plan to clear all debts effectively. Their online application is available 24-hour-a-day and 7-day-a-week without showing up in person^*.

Simply present your HKID card with your phone number^# to get approved online, which all people even the freelancers can find the procedure simple and quick. Loans are transferred through FPS^{^} instantly once approved, helping you to get rid of the min. payment and pay off all the bills shortly.

Promise HK's annual percentage rate (APR) can be as low as 1.12% and we do not charge any handling fee and interest penalty. With our flexible repayment period of 3 to 84 months, you can organise personal finance better and save thousands of dollars each year.

Getting Rid of Min. Pay (5) - Use Credit Card Autopay

Some people pay off credit card debts with cash, ATM transfer, or PPS. If they hold multiple credit cards, they tend to worry about forgetting to pay and being penalised.

Therefore, it is a good idea to set up an automatic credit card payment so the bank will automatically repay the debts before the due date each month. It should be noted that the monthly repayment amount should be set to "full repayment". Avoid choosing the minimum payment or other options so that the debts can be cleared as soon as possible!