I’m officially out of my credit card debt! No, I did not use my personal money to pay for it. I got a salary loan from SSS (my first time, actually) and made a comparison using three scenarios.
Okay, so my HSBC card’s outstanding balance is around 30,000 pesos. My goal for 2013 is to zero it. Heck, a 3.5% interest per month on my outstanding balance is just TOO MUCH! I want to stop being a “revolver.” I learned a lot from this credit card debt.
I compared the three possible sources of my fund.
Scenario A, If I am going to avail of an SSS loan worth PhP 30,000, I will be able to zero out my credit card debt and pay the monthly amortization at PhP 1,385 for two years. At the end of the 24th month, I would have paid PhP33, 240 and the total interest paid would be PhP 3,240.
Scenario B, if I’m going to pay the same amount (PhP1,385) to HSBC, I would finish my obligation in 38 months and the total amount paid would have been PhP52, 630! The total interest paid would have been PhP22, 630!
Scenario C, if I will continue paying PhP2,500 per month, I would be debt-free in 15 months but the total amount paid to HSBC would have been PhP37,500. The total interest paid would be PhP7,500.
I picked Scenario A because of the following reasons:
1. I’d like to take advantage of SSS’ low interest rate. I wouldn’t feel the PhP692.5 deduction every payday.
2. I am not willing to pay PhP30,000 upfront. Hello, I can smell the holidays! I don’t want to use my credit card for the holidays. It’s either I won’t spend too much or I won’t spend a single centavo at all. Lol!
What about you, what is your credit card story?