The True Cost of Paying Only Minimum on Your Credit Card

Every month, your credit card statement shows a minimum payment — usually 5% of the outstanding balance or RM50, whichever is higher. It feels affordable. But this small number hides an enormous cost that most Malaysians never calculate.

Let's Do the Math

Suppose you have RM30,000 in credit card debt at 18% per annum (a standard rate for Malaysian cards like Maybank, CIMB, and RHB). You stop using the card and pay only the minimum each month.

Here's what happens:

• Month 1: Minimum payment = RM1,500 (5% of RM30,000). Interest charged = RM450. Only RM1,050 goes to principal.
• Month 12: Your balance is still around RM20,800. You've paid RM12,600 but only reduced the principal by RM9,200.
• Year 3: Balance hovers near RM11,000. You've paid over RM28,000 total.

If you continue paying only the minimum, it takes approximately 9 years and 8 months to clear the debt. The total amount paid? Roughly RM50,700 — meaning you paid RM20,700 in interest alone on top of the original RM30,000.

That's almost 70% extra just in interest.

What If You Pay a Fixed RM1,500 Instead?

If you commit to a fixed payment of RM1,500 per month (the same as your first minimum payment, but never reducing it), the picture changes dramatically:

• Debt cleared in approximately 2 years
• Total interest paid: roughly RM5,400
• You save over RM15,000 compared to the minimum-only approach

What If You Consolidate?

A consolidation loan at 6% flat per annum over 4 years for RM30,000 gives you:

• Monthly payment: approximately RM775
• Total interest: RM7,200 over the full tenure
• Debt-free date: exactly 48 months from now

While the total interest is higher than the aggressive fixed-payment method, the monthly commitment is half the size — freeing up cash flow for emergencies, EPF voluntary contributions, or other financial goals.

Why the Minimum Payment Trap Works

Banks design minimum payments to maximise interest revenue. The longer you take to repay, the more they earn. BNM requires issuers to set minimums at 5%, but even that seemingly reasonable figure extends your repayment timeline by years.

Three Rules to Escape the Trap

1. Never pay just the minimum. Pay at least double whenever possible.
2. Fix your monthly payment amount. Don't let it shrink as the balance drops.
3. Consider consolidation if your total credit card debt exceeds RM20,000 and you can't clear it within 12 months.

Next step: See how a consolidation loan changes the math — run your numbers on pinjamHub.