Successfully paying off credit card debt: Strategies to achieve financial freedom


13th October 2023 – (Hong Kong) Credit card debt has become an increasingly worrying issue for many Hong Kongers in recent years, as rising costs of living make it harder to keep up with payments. However, with the right strategies, even large amounts of credit card debt can be paid off over time.

According to a recent report by the Hong Kong Monetary Authority, the combined delinquent and rescheduled ratio for credit card debt rose slightly to 0.30% in the second quarter of 2023. This indicates more cardholders are falling behind on payments. Additionally, the quarterly charge-off ratio increased to 0.44%, meaning banks wrote off more credit card debt as uncollectible.

With higher interest rates on the horizon, it’s crucial for indebted Hong Kongers to take action. Here are some of the most effective ways to tackle credit card debt and successfully pay it off:

Consolidate Multiple Cards

If you have large balances across several credit cards, consider consolidating into a lower interest debt consolidation loan. This allows you to make one monthly payment at a fixed interest rate, rather than juggling multiple cards with varying rates. Calculate potential savings in interest payments before applying.

Transfer Balances to a 0% Intro APR Card

For borrowers with good credit, balance transfer credit cards offer 0% introductory APR periods, allowing you to pay down debt without accumulating interest. Transfer existing balances to the new card and pay as much as possible during the intro period before rates rise.

Create a Budget

Get clear on where your money is going each month. Track spending to identify areas to cut back, such as dining out, entertainment or impulse purchases. Diverting those savings towards paying off cards can make a major dent. Even small trims add up over time.

Pay More Than the Minimum

Paying the minimum only prolongs interest charges. Pay as much above the minimum each month as you can reasonably afford. Increasing payments by even 10-20% makes a big difference in how quickly balances fall.

Earn Extra Income

Bringing in supplemental income from freelancing, tutoring or other side hustles provides extra cash to put toward debt repayment. Consider picking up a seasonal side job over holidays or summer vacation. Even a few hundred extra a month speeds the paydown process.

Save Windfalls

Use bonuses, tax refunds, gift money or other unexpected funds to make large one-time payments on your highest interest card. Avoid spending these windfalls so you can capitalise on debt reduction.

Cut Up Cards

Once you’ve consolidated balances to one card, cut up any other credit cards and freeze them in a block of ice. This prevents temptation to continue charging and accumulating debt across multiple cards.

Paying off substantial credit card debt takes time, discipline and commitment. But implementing even a few of these strategies can put Hong Kongers well on the path to becoming debt-free, regardless of rising interest rates or economic uncertainty. The key is developing better financial habits and redirecting money towards paying off cards as efficiently as possible. With consistent effort, even large credit card balances can be eliminated.