We have discussed three types of credit card payments: full payment every month, paying a minimum fee, and not paying at all / in arrears. This time we will explore more about payments with a minimum payment, including those including definitions, illustrating credit card payments with a minimum payment, so the steps that must be taken if already paid for the minimum payment.
Definition of Paying a Minimum Payment Credit Card
As the name suggests, the minimum credit card payment is a payment made by the credit card owner by paying only (in an average) 10% of the total arrears + bills that have not been paid in the previous month (if any). This type of payment is an option, especially for those who don’t want to be included in the negative list of CTOS and CCRIS. However, is it true that paying credit cards with the minimum payment is the right choice? Let’s look deeper.
Why is Payment of the Minimum Payment Credit So Favored?
Paying a minimum fee is often chosen by credit card holders. This is not without reason, the choice to pay a minimum fee is so popular because surely the owner of the card does not need to pay in full, and still may use the tray to make other payments. This situation is taken when the owner of the card is unable to pay in full, but does not want his name to be included in the black list CTOS and CCRIS.
Even if you don’t make a full payment, you don’t need to worry about your good name. The bank will still assume that your payment is smooth because there is no arrears at all. This means, the owner of the credit card will avoid the threat of black shading which will cause difficulties in making loans in the future.
However, paying a minimum fee is not the best way because it will not free you from debt at all. Why is that? The following is an illustration of payment in a minimum credit card payment, which can make you see firsthand the impression of the payment on the settlement of the credit card debt that you currently have:
Illustration of Credit Card Minimum Payment Settlement
We have illustrated a minimum payment credit card settlement to show the order to pay a credit card with a minimum payment to complete all payments. In this process, the owner of the card is considered not to use the credit card again, and is trying to pay it off so that the arrears tray runs out. The following is an illustration of the repayment of credit cards for a minimum fee :
Budi has a credit card debt of Rp. 50,000,000 (worth RM14,343) with an interest of 2.25% and an annual rate of Rp. 300,000 (worth RM86) because he is unable to pay the bill in full every month, so Budi decides to make a minimum payment of 10% of the total arrears each month so that it is completed. In this case, Budi does not use the card at all and only focuses on paying off arrears for a minimum fee. How long will Budi be free of arrears?
We can see that the debt will be repaid at minimum for the 67th month or after 5.5 years. Imagine if you become Budi. This means you have to survive without using credit cards at all to pay off the paid trays. Even though in reality, if Budi made regular payments and could use credit cards to the maximum, Budi could use the credit card to get other useful promotions for cheaper shopping. It is very detrimental if the credit card is not used at all and is only used to pay the arrears of official loans.
Stop Paying Minimum Credit Requirements
After seeing the illustration of the payment with the minimum payment made by Budi above, you can see that actually Budi as the owner of the credit card only collects debt without completing it at all. Budi still cannot avoid the interest that continues to run behind the payment of credit cards for a minimum fee. Therefore, this certainly only causes longer time to pay off the debt. On Budi’s case, with a debt of 50 million, he could only be repaid 5.5 years later.
Kes like this might happen to you. Based on what is experienced by Budi, you as the owner of the card must continue to pay a minimum credit card for years if you want to pay it off. After all, when you focus on paying credit cards for a minimum fee, you also can’t take advantage of the credit card for attractive promotions that should be able to benefit. The more cards are used, the more you will be charged to pay off the debt balance that is still running.
If you’ve already paid the minimum credit card payment, there are a number of steps you can take to overcome this:
Stop Using Credit Cards and Reduce Expenditures
If you start making payments for credit cards at a minimum payment, this is the time to stop using these credit cards. This is useful for reducing collected bills. Imagine if you pay for the bill this month you have experienced difficulties, especially if collected with a new bill. Excluding the interest charged in overdue payments, it will certainly make it difficult for you to solve it.
Not enough to stop using credit cards, you also have to reduce spending actively. Cuba look back at the monthly expenses that you often do. Look again at the types of expenses that need to be stopped, pay attention again to what household expenses should be more saved in order to help reduce expenses. Stopping expenses can be done from the simplest cases, such as if you always use the solemn application of Teksi , try to compare prices wisely or choose a public vehicle. If you often shop at a market that is more expensive, it never hurts to start switching to the nearest traditional market that offers a much cheaper price.
Do not forget too, when reducing expenses try to also pay attention to all expenses that must be done regularly. This does not mean that you are increasing your expenses, just need to be done so that you do not impose more expenses later on. Expenditures that are still paid regularly even though it is minimizing expenses are health insurance, and other incidents. When you are sick, the premium payments you make each month can flower well, so you no longer need to spend extra.
Use Available Savings
If you are forced to, use other sources of funds to pay off all credit cards at the right time. One option that you can use is a savings account specifically saving. Even if forced, at times of anxiety like this money saved in a savings account can help free you from credit cards. This warns us that credit card interest is quite high when compared to savings interest. Basically, if your credit card debt is high enough and you have not paid in full, it is better to use savings.
Use the Anxiety Tube
Another source of funds that can be used to pay for credit cards is an anxiety tube that has been stored for a while. If you save quite regularly, of course you can certainly save anxiety tubes every month. A financial expert says that every month you can save at least 10% of the salary you get. From another angle, if the risk of work is getting bigger like working as a freelancer, professional, singer, add savings with a 6-9 month reserve, but if you are a retainer at least provide savings of 9-12 months of expenditure.
Anxiety tube can be collected using an automatic designed savings by performing an auto debit every month from your transaction account. Another way to collect anxiety tubes as a way to resolve debt quickly is to ask people who still owe you. Usually the amount of receivables that you have really helps you to collect savings to pay off debts.
Ask for Family Assistance or Meeting Friends
If forced, you also make payments using assistance from your family and friends. This certainly requires a big commitment if you choose to make this choice. Loans from family or friends are usually not accompanied by interest, and tend to be more mitigating. However, you must return the money as a promise, so that the relationship that has been established remains good without new conflicts arising from the loan.
Look for other ways to get relief in paying off credit
If you use a minimum fee because you are unable to pay it in full, there are other ways you can do it. The method is to take part in a bank relief program. This method is certainly better than continuing to make payments for a minimum fee, which is not much different from delaying credit card payments. You can take part in a relief program to get a discount in paying credit card bills.
Relief Program to Pay Off Credit Credits
As explained, there are other ways you can use it to pay off the ever-increasing credit card, namely by taking part in a relief program. It is often known that the payment of a minimum payment fee is due to the inability to pay from the owner of the card. Some of the main reasons why a person is held in debt, for example, losing a family’s spine, losing his job (a company where he works to reduce workers), being hit by a disaster, or trading illusively.
To overcome this case, you can use 3 types of bank programs that can ease your burden in paying off debts that are still running:
Discounts / Discounts in One Payment
This type of relief program is good for customers so that the amount of debt is reduced to smaller. As the name implies, even though the customer gets a debt discount (usually 20-50%), they must continue to pay in one payment. In some cases, this relief program can give owners a discount rate of up to 70%. So, you don’t have to wait so many years to pay off debt, and of course accompanied by a larger total discount.
Ansuran that is Extended with Low Interest
Unlike the one-time discount program, this program is suitable for those of you whose financials are rather minimum. In summary, customers who have credit card arrears or personal loan arrears can extend the installment period to be lighter, the interest is even lower than the prevailing interest rate. If the normal interest that runs when it is in the range of 2.25%, then there is a possibility to get interest at 0-2% only.
In contrast to this one program, this type of program is a combination of the two types of programs above, ie customers get a discount and the payment tray is carried out by installments. The bank will also see the situation experienced by the customer first. If the customer is the host that makes it difficult for him to repay the debt, then they are likely to get this program (with the relevant bank records having the program).
To get a relief program such as the three options above, you may ask for help from a company that provides debt management programs. Companies that provide debt management programs like this usually have experienced troops who are professional in helping you to strategize in paying off debt. What’s more if you have multiple debts at various banks once, of course companies that provide debt management programs can help you in formulating strategies and deciding which type of arrears to be settled first following your financial situation.
One of the advantages of using a company that provides a debt management program to overcome your credit card debt problem is so that you can focus on finding funds to pay off debt. At this time a consultant from the company that provides a debt management program plays a role to help you get the best waivers, so that you are able to pay off the debt tray, without the need to pay for credit cards with a continuous minimum payment One company that you can use is Barry Lyndon.
Barry Lyndon International is the first technology-based professional services company in Indonesia, which provides a debt management program. This program is designed so that customers who are held in debt are able to control their original financial condition. Barry Lyndon Indonesia assists clients through a specially designed debt management program according to different requirements for each client. This program is a combination of upbringing on various opportunities to increase income and reduce expenses, and conduct negotiations on the terms of existing bank loans so as to reach the amount of payment that is in accordance with the ability. Barry Lyndon Indonesia’s central official was established in Jakarta in 2015 by a founding team that has collective experience in the financial sector including debt settlement for more than two decades. Barry Lyndon has made Indonesia as a center of operations once a blueprint for the company’s development plan to other ASEAN countries. Since July 2016, Barry Lyndon Indonesia has become the first company in Asia to obtain accreditation from the International Association of Professional Debt Arbitrators (IAPDA).