Credit Card

I have the intention to pay my credit card debt in six months. I was able to do it in 2010 when I decided to cut my Mabuhay Miles credit card. It felt good then to get rid of those high monthly interest rates. A year later, who would have thought that my remaining credit card would be my source of headache? It started with a credit card debt that was manageable until I fell again into my habit of not inspecting the monthly billing statement.

The billing statement reflects the cut off date, payment due date and minimum payment requirement. Ideally, if one wants to avoid finance charges or interests, he must pay his credit card balance in full. I SHOULD have done that a year ago. Credit cards could be alluring and tempting to use during the holidays and sale. The more you use your credit card, the more debts pile up. If you are just paying the minimum monthly payment which is 4% of your outstanding balance, then you’re doomed to pay forever!

I got into a trap of just paying the minimum monthly payment because I preferred my money to be kept in the bank. In the long run, the 3.5% interest per month on my Red Card (HSBC) is robbing off my potential savings! Heck, banks just give us a 2% interest rate per ANNUM for savings account. Two percent versus 42% per annum, then I’m losing 40% of my potential savings on interest rate!

My plan is to pay 20% of my outstanding balance by the end of August 2012. The goal is to reduce my outstanding balance by 20% so that my minimum monthly payment will be reduced. From there, I will pay above my minimum monthly payment until my outstanding balance settles to a figure that I’m comfortable to pay in full.

I’m tempted to balance transfer my HSBC credit card to BDO but I’m afraid of hidden charges and penalties. It took me five years to realize some of the basic things about my credit card and transferring to another organization with different sets of rules might do more harm than good to me.