MIN PAY TRAPS
Credit Card Min Pay Traps
Basically, every Hong Kong adult has a credit card. The reason is very simple that credit card actually is a way of short-term loan. Moreover, normally bank/ loan company approve $30,000 or above credit amount but university student is only approved by $10,000. Credit amount increases relatively according to your income increases or repay on time. It is very convenient to most of the people.
Recently online shopping is getting more common (most of them can be paid by credit card. It largely increases each consumer’s purchasing desire. It can easily make people spend more. When bill is issued, most of people will be surprised by the due balance. However, the monthly bill has a min pay notice in order to suggest you paying min pay so that you don’t need to repay at once!
But, most bank’s interest of credit card is very ambiguous, even though listing out a whole formula, you still don’t know how to calculate. Since most of credit cards are issued by banks, many people think the min pay interest of bank should not be so high then they turn out pay min pay every month. As a result, they fall in the traps of credit card companies or banks.
How to Calculate Min Pay? How much is interest?
Normally monthly statement of bank shows min pay which is minimum repayment, normally is about $200. Compare with repaying at once, it is of course attracting. In fact, min pay is used to repay the interest and other financial fees only, then repay principal at last. Therefore, the day of completely repayment is never come……
What’s more, interest of min pay is extremely high, usually calculated at least 30 percentage moreover it is calculated as compound interest.
If cardholder choose to pay min pay monthly, he need 26 years in order to fully repay all balance. Total spending (principle + interest) is $67,536 minus $20,000 card overdue balance. That means interest is $47,536! It is 2 times of principle! How exaggerate it is?
It is reminded that there is an assumption of no new bill but are you sure that you will not pay by credit card? I thought…should be not. If there is new bill, all accumulated interest result in snowball effect, it becomes more and more at last.
Clear credit card loan brooks no delay. If you need, you could consider our credit card loan：Credit Card Loan
– Loan amount reach $300,000, clear card loan is no difficult!
– Calculated in simple interest, No compound interest.
– Repayment period 1 day to 60 months, repay anytime.
– Calculated in daily basis and saves a lot of interest!
If you want to know about credit card min pay details, you could call HKMA: 2878 8196 or visit website ：HKMA
What is Effects of Only Repay Min Pay?
If you choose to pay min pay, you have to prepare to face a lot of negative effects……
1. Extremely High Interest
– As above mentioned, since credit card min pay is calculated in compound interest, it results in high interest.
2. Extremely Long Repayment Period
– Choosing repay in min pay monthly, as above example said, it needs total 26 years to fully repay it!
3. Affect TU Report
– In fact, credit card min pay is another way of borrowing money, keep repaying in min pay just means that you don’t have enough money to repay it and repayment period takes so long then overdue balance accumulate more and more, how could TU be good?
If you want to know more about TU information, go to there: ：What is TU?