Janet* works for an advertising agency, earning $3,000 a month. She is 24 years old, single and lives with her parents in a HDB flat in Hougang. Janet loves to shop and usually charges her purchases to her two credit cards.

When her credit card bills arrive at the end of each month, Janet pays the minimum amount required and continues to spend freely on her credit cards. This spending pattern has seen her credit card debt mount. She now has about $8,500 outstanding on her credit card balance.

What should she do?

First of all, Janet has to recognise that if she continues to pay only the minimum amount every month as she carries on spending freely with her credit card, her credit card balance will continue to grow as will her minimum amount payable.

She also has to understand that she is being charged interest on the balance. Janet must reassess her spending habits and realise that if she continues to shop on credit without paying her bills in full when they arrive, she will ultimately be paying more for the things she buys.

It's no use going to a sale and buying discounted goods, only to find that the true cost of these items is bumped up by the interest payments she has to make on her credit cards as she does not pay her credit card bills on time.

If it's not possible for her to pay more than the minimum amount payable and become more disciplined about her spending. This double-pronged approach will gradually help rein in her credit card balance. If it's not possible for her to pay more than the minimum amount, then she should cut her spending further. Either way, it will take a lot of time and she has to spend a fair amount of money on interest to get rid of her credit card debt.


* Names are fictitious