Avoid making minimum payments or taking installment plans or consumer loans
Original: eternity4719 · source details
Original author: eternity4719 · Chinese source: · English adaptation: parveen0029. Translation and grade notes ↗
Bibliographic titles are retained in their original language.
Source author's views and grades; not individually verified by this site.
Cost and benefit at a glance
- Check the cost Cost ↓
- No cost at all. You must keep enough cash on hand to pay the full balance by the due date. The hard part is resisting the urge to spread out large purchases via…
- Then the source benefit Benefit ↓
- Before 2020, credit‑card interest rates were capped: the maximum daily rate was 0.05% and the minimum was 70% of that cap. At 0.05% daily, the annual simple interest rate comes to …
In plain terms
Making minimum payments is not a discount — it is essentially a daily‑interest loan that works out to roughly 18% per year. Once you use this option, the interest‑free period ends immediately, and the unpaid portion of the balance accrues interest from that point onward. Always look at the annual percentage rate when comparing offers; regulators now require issuers to display this figure prominently, rather than just the daily rate. The minimum rate is exactly 0.7 times the maximum rate.
This guide's cartoon · show illustration
Enlarge illustrationOriginal illustration with Chinese lettering; the English dialogue is below. Humour is a reading aid, not evidence.
English dialogue
- Hang on. I never agreed to renew!
Cost: what it takes
No cost at all. You must keep enough cash on hand to pay the full balance by the due date. The hard part is resisting the urge to spread out large purchases via installment plans.
Benefit: what the source reports
Before 2020, credit‑card interest rates were capped: the maximum daily rate was 0.05% and the minimum was 70% of that cap. At 0.05% daily, the annual simple interest rate comes to 18.25%. Starting in 2021, issuers and cardholders can negotiate rates freely. After opting for minimum payments, the unpaid balance continues to accrue interest daily while the interest‑free period is lost. Authorities now demand that issuers clearly show the annual rate; you should base your decision on this figure alone (China, 2020 notice).
Conditions, limits and disagreements
The 18.25% figure results from multiplying 0.05% by 365 without compounding; the actual rate would be higher if interest were compounded monthly. Some banks offer discounts, but you must refer to the annual rate listed on your own statement. If you truly cannot afford the payment, seek a lower‑rate loan from a reputable lender rather than letting minimum payments pile up.
Original references
Original bibliographic titles and links are preserved; some titles are in Chinese.
中国人民银行 (2020). 关于推进信用卡透支利率市场化改革的通知（银发〔2020〕327 号）. https://xining.pbc.gov.cn/zhengwugongkai/4081330/4406346/4693549/4159909/index.html；中国人民银行 (2021). 中国人民银行公告〔2021〕第 3 号（第一、三、四条，附件《采用内部收益率法计算贷款年化利率示例》第三例）. https://www.gov.cn/zhengce/zhengceku/2021-03/31/content_5597156.htm；最高人民法院 (2020 年第二次修正). 关于审理民间借贷案件适用法律若干问题的规定（第一、二十五、二十六条）. http://gongbao.court.gov.cn/Details/94b6623974526df7d2430a3c73f050.html（最高人民法院公报）；最高人民法院 (2020). 关于新民间借贷司法解释适用范围问题的批复（法释〔2020〕27 号）. https://www.court.gov.cn/fabu/xiangqing/285171.html；全国银行间同业拆借中心受中国人民银行授权 (2026). 2026 年 8 月 20 日贷款市场报价利率（LPR）公告. https://www.chinamoney.com.cn/chinese/rdgz/20260820/3399885.html
Medical, legal, financial and policy conditions vary by person, place and time. Policy material primarily concerns mainland China; check the cited document and current local requirements.