Repayment Options for an HSBC Credit Card

Written by joseph jacob
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An important aspect of managing a credit card, such as those issued by HSBC, is understanding your interest rate and the implications of carrying a balance. While cardholders generally do not pay interest on their balance if they pay it off in full each month, any outstanding and unpaid amount at the end of a charge cycle may be subject to a hefty interest rate.

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Pay Off in Full

The best option for paying off your credit card is paying the account off in full. When the account is paid off in full, HSBC will not charge you any fees and interest associated with the balance.

Partial Payment

If you can't afford paying your balance in full, pay as much of your balance as possible to reduce the associated interest payments on your balance. The Federal Reserve provides an online credit card repayment calculator for you to see how much time and interest various payments on you credit card could cost. To use the tool effectively, you should know the annual percentage rate (APR) your HSBC card charges you.

Minimum Payment

Although making the minimum credit card payment will conserve your on-hand cash in the short term, your debt will likely grow significantly by the time it is eventually paid off. For example, the Federal Reserve says that credit card debt of £6,500 subject to 18 per cent interest could take 46 years to repay and would cost the cardholder an additional £18,110 in interest. The minimum payments would likely be £130 per month.

Debt Management Plans

Under a debt management plan, the cardholder pays a set amount of money per month to their credit counselling agency that uses such funds to pay down their credit card (and other debts) pursuant to a payment schedule. According to the Federal Trade Commission, a debt management plan could take 48 months or longer to complete.

Debt Negotiation Programs

The Federal Trade Commission says the riskiest method to deal with excessive credit card debt is to engage in debt negotiation with your creditor because it could leave a long-term scar on your credit history. Therefore, be very careful if you consider dealing with a debt negotiation firm.

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