All calculations and figures shown are estimates for illustrative purposes only. Actual amounts may vary depending on calculation methods and the terms set by the relevant financial institution. Readers should refer to their official statement or contact their bank for accurate information.
That “5%” number on your statement is not a suggestion from your bank. It is a trap door.
Paying only the minimum on a RM5,000 balance keeps you in debt for almost six years and quietly charges you nearly RM1,900 in interest.
On a RM10,000 balance, you are looking at more than seven years and around RM4,000 in interest.
How the minimum payment actually works
In Malaysia, the standard minimum payment is 5% of your outstanding balance or RM50, whichever is higher.
Bank Negara Malaysia (BNM) sets the rules of the game, and the finance charge on credit cards is capped using a tiered structure based on how promptly you pay.
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BNM’s Tiered Interest Rates :
- Tier 1: max 15% p.a. if you pay at least the minimum on time for 12 consecutive months.
- Tier 2: max 17% p.a. if you pay on time for at least 10 out of 12 months.
- Tier 3: max 18% p.a. for everyone else
Miss even one payment and you can get bumped from 15% to 17% or 18% for the next cycle.
Paying the minimum keeps your CCRIS record clean and keeps you in a lower interest tier. The interest still compounds on the 95% you did not pay.
The calculation that changed how I use my credit card
Say you owe RM5,000 at 18% p.a., which works out to 1.5% per month. In your first month, the interest alone is RM75.
Your minimum payment is about RM254. So out of that RM254, RM75 goes straight to the bank as interest, and only RM179 actually touches your debt.
You paid RM254 and your balance barely moved.
| Balance | Time To Clear | Interest Paid | Total Paid |
|---|---|---|---|
| RM1,000 | 2 years | RM198 | RM1,198 |
| RM3,000 | 4 years 7 months | RM1,037 | RM4,037 |
| RM5,000 | 5 years 9 months | RM1,876 | RM6,876 |
| RM8,000 | 6 years 10 months | RM3,135 | RM11,135 |
| RM10,000 | 7 years 4 months | RM3,974 | RM13,974 |
Interest compounds daily on most cards. A “15%” rate effectively becomes around 16.18% a year once daily compounding does its thing.
A fixed monthly payment makes a big difference
Pay a fixed ringgit amount instead of the shrinking minimum. Same RM5,000 debt, same 18% rate:
| Strategy | Time To Clear | Interest Paid |
|---|---|---|
| Minimum only | 5 years 9 months | RM1,876 |
| RM250 fixed / month | 2 years | RM989 |
| RM300 fixed / month | 1 year 8 months | RM797 |
| RM500 fixed / month | 11 months | RM458 |
Notice that RM250 a month is roughly what your first minimum payment would have been anyway. The difference is you just kept paying RM250 instead of letting the minimum shrink with your balance.
The system makes it easy to stay in debt
If you have been paying by the minimum for a while, you are not alone. Agensi Kaunseling & Pengurusan Kredit (AKPK) reported that around 53,000 Malaysians aged 30 and below carry close to RM1.9 billion in debt combined.
Averaging roughly RM36,000 each, with credit cards and personal loans doing most of the damage.
And in the Dewan Negara, the government confirmed that over 5,200 youths under 34 were declared bankrupt between 2020 and early 2025, with 877 youth bankruptcy cases in 2024 alone, up from 727 the year before.
What to actually do
1. Pay a fixed amount, not the minimum
Take your first minimum payment amount and lock it in as your monthly payment until the debt is gone. Set up a standing instruction so it happens automatically.
2. Stop new spending on the card
New purchases on a card carrying a balance lose their interest-free period on most cards. Debit card or cash while you clear the debt.
3. Consider a balance transfer
Many banks offer 0% balance transfer plans for 6 to 12 months. Move the debt, divide it by the number of months, and pay that fixed amount. Watch for one-time upfront fees.
4. Protect your tier
Whatever happens, never pay late. One late payment can push your rate from 15% to 17% or 18% and adds a late fee of 1% of the outstanding amount (min RM10, max RM100), plus a mark on your CCRIS.
5. Big debt? Call AKPK, for free
If you cannot realistically clear the balance within a few months, AKPK’s Debt Management Programme can restructure your repayments at reduced rates. 1800-88-2575, no charge, no judgment.
AKPK is a one-time lifetime assistance programme available to each individual, and applicants should carefully consider their circumstances before using their services.
Pay more today, owe less tomorrow
Paying the minimum may keep your credit card account active, but it does not mean your debt is under control. It simply buys you more time, and that time comes with interest.
Review your credit card statement carefully, pay more than the minimum whenever possible, and seek professional support early if your repayments are becoming difficult to manage.
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