Suppose you owe HK$40,000 on a card at 32 percent with a HK$1,200 minimum, and HK$20,000 on a second card at 18 percent with an HK$800 minimum, and you can add HK$2,000 of extra payment each month. Using the avalanche method, the extra is aimed at the 32 percent card first because it costs the most. The combined balance of HK$60,000 clears in about 20 months, roughly one year and eight months, and you pay around HK$13,452 in total interest, for a total outlay of about HK$73,452. The snowball method would instead clear the smaller HK$20,000 balance first for quicker psychological wins, but because the higher rate keeps running on the larger card, it usually costs a little more interest overall.
How it is calculated
The tool runs a month-by-month simulation across up to three debts. Each month it adds interest at the monthly rate, which is the APR divided by twelve, then pays the minimum on every debt. Any remaining extra payment is directed at one target debt: under avalanche it goes to the highest interest rate first, and under snowball to the smallest balance first. As each debt clears, its freed-up payment rolls into the next, which is what accelerates the later debts. The loop continues until everything reaches zero, totalling the interest paid along the way. If the minimum payments do not even cover the monthly interest, the balance cannot fall, and the tool warns that you need to increase your payments rather than reporting a payoff date.
Frequently asked questions
Should I use the snowball or avalanche method?
The avalanche method targets the highest interest rate first and costs the least in total interest. The snowball method clears the smallest balance first for quicker wins and motivation. In Hong Kong, credit card APRs often exceed 30%, so avalanche usually saves the most. Both apply your extra payment on top of the minimums.
What are typical credit card interest rates in Hong Kong?
Most Hong Kong credit cards charge an annualised percentage rate (APR) between 24% and 36%, with many major banks sitting around 30% to 36%. Some instalment plans offered by banks carry lower rates, but standard revolving balances are expensive. Paying only the minimum each month means a large portion of every payment goes toward interest rather than reducing the principal.
Is there a minimum payment rule in Hong Kong?
Hong Kong banks typically require a minimum monthly payment of 1% to 3% of the outstanding balance, or a fixed floor amount such as HK$50 or HK$100, whichever is higher. Paying only the minimum is enough to avoid a late fee but will extend repayment by many years on a large balance. The Hong Kong Monetary Authority encourages cardholders to pay more than the minimum to reduce overall interest costs.
Can I consolidate multiple debts in Hong Kong?
Yes. Several Hong Kong banks offer personal instalment loans or debt consolidation loans at rates significantly lower than standard credit card APRs, often between 5% and 15% per year. Consolidating into a single lower-rate loan can reduce total interest paid and simplify repayment. Compare the flat rate and effective interest rate (EIR) carefully, as some lenders quote flat rates which understate the true cost.