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The Great Credit Card Debt Trap


An article regarding how Australian consumers are getting trapped by credit card debt.

We always pay our cards in full every month but unfortunately, a great many others do not,

I paid my CBA MasterCard last week.It was just under $2,370 and the advice on the statement was that if only the minimum payment of $47.00 was made, it would take some 36 years & 11 months to pay off and incur interest charges of $11,696.38 but if $122.12 was paid, it would take only 2 years to pay off, incurring interest charges of $559.79 and saving $11,136.59.

After the Banking RC, surely the government could at least legislate that the minimum payment must be a realistic amount.

If consumers cannot pay a realistic minimum amount, they would obviously be much better off without these debt traps.


‘Which government’ are you suggesting?
We now know ‘which bank’!

Of course the banks and the credit card companies could act as suggested without any need for legislation.

It might be worth pointing out that the CC statement neglects adding in the costs of the fees and any other charges attached to the credit card for the 36 yrs and 11 months needed to pay the amount off. As these typically increase each year without any control over the amount, a customer could end of paying an added bonus to the bank in CC fees over the 36 yrs and 11 months similar to the total cost of the repayments!


Minimum payment is a minimum payment only. It is the decision of the card holder how much is paid and the minimum amount is the amount the banks/card company is willing to accept to reduce their own risks.

In positive light, the minimum amount does pay off the credit card debt, albeit in a very long time frame. If the debt wasn’t paid off by the minimum amount, then this would be very concerning.


Unfortunately, it is this minimum payment which causes consumers to get stuck in thses debt traps.

They need to be protected from themselves.


It is good to see this information (how long it will take to pay off) on statements. If you are income poor and had to use the credit card for a big payment, then coming up with a large re-payment may be a bridge too far. A minimum payment at least shows the bank you are engaged with your debt.
Fortunately I have never been in that position. I have kept meticulous records and budgets all my life, payed off my card in time. But I know people who are hopeless at it and get knocked for six when the car rego, insurance and rates arrive together.


I can’t afford to pay mine off completely, but I pay 3x the minimum and I think its 18 months before its paid. Even when the card was maxed, the minimum was doable. I ignored the many entreaties from the bank to increase the max I could have because I knew that was way beyond anything sensible. As it is, I plan to reduce the max once its paid off.