We’ve all heard the saying “a little can go a long way.” Unfortunately, in the world of credit cards, that “little” can spiral into something way bigger than expected—like $11,000 bigger. In 2011, what seemed like a modest credit card bill of S$648 turned into an overwhelming S$11,479 debt for one Singaporean man, highlighting the potential dangers of credit card misuse and compounding interest.

If this sounds unbelievable, it’s not. It’s a stark reminder of how credit cards can spiral out of control if not managed wisely. Let’s dive into this financial cautionary tale that every Singaporean should know about.

How Credit Cards Really Work 💳

Credit cards are like that tempting friend who says, “Don’t worry, pay later!” But here’s the catch: if you don’t pay your full balance by the due date, you’re not just slapped with interest—you’re hit with a KO punch to your wallet.

A credit card allows you to borrow money to pay for goods and services. While it offers flexibility and convenience, it comes with strings attached—interest rates and fees. This is where things went downhill for Ang Cheng Shin, who defaulted on his credit card repayment.

The Math Behind the Madness 📊

Credit card interest is calculated daily, meaning every day you don’t pay, your debt grows. Here’s a simple breakdown:

1. Let’s say your unpaid balance is S$648, and your card has a 20% annual interest rate
2. Daily interest = Outstanding balance × (Annual interest rate ÷ 365)
3. That’s S$648 × 0.00054795 = S$0.35 per day

While S$0.35 per day might seem small, it compounds if you only make minimum payments or none at all. Add in late payment fees of $200 each time you miss a payment, and you’ve got a recipe for financial disaster.

What Really Happened? 📉

In 2011, our protagonist racked up a $648.52 credit card bill. While the article doesn’t detail how he ended up in this situation, it’s a scenario that’s all too common. Maybe he was already living paycheck to paycheck and turned to his credit card to cover an emergency expense—a new phone, perhaps, or a medical bill. Without any savings to fall back on, he couldn’t pay the full balance the following month. Interest started piling up, and before he knew it, his manageable debt had begun to snowball.

Another possible explanation is money avoidance, a psychological defense mechanism where people ignore their financial problems. Perhaps he felt overwhelmed by the growing debt and stopped opening bills or checking statements altogether. Over time, frustration and a sense of injustice could have taken over—why pay a debt that feels impossible to clear? Unfortunately, this avoidance only allowed the interest and late fees to compound further.

According to the article, he did make a few payments along the way, but they were never enough to cover the interest. This likely left him feeling stuck in a vicious cycle, where every payment seemed futile. Fast forward to 2023, and his debt had ballooned to a staggering $11,479.63—16 times the original amount. That’s not just “a lot of money”; it’s a crushing burden of financial stress.

However, it’s worth noting that he took an important step in the right direction: coming to an agreement with the bank on a debt repayment plan. This likely waived a significant portion of the accumulated interest and late fees, reducing his total owed amount to $3,840—a far more manageable figure. It’s a good reminder that seeking help early and engaging with creditors can open the door to solutions, even when the situation seems dire.

What Should You Do if You’re Drowning in Credit Card Debt? 🛟

If you’ve found yourself in a similar situation, here’s your action plan:

1. Face the Problem Head-On

   • Open those bills, calculate how much you owe, and make a plan
   • Avoiding the debt won’t make it disappear (we wish!)

2. Stop Using the Card

   • Cut back on expenses and avoid adding to the balance
   • Put your card on ice (figuratively or literally!)

3. Explore Debt Consolidation Plans

   • Many Singaporean banks offer Debt Consolidation Plans (DCP)
   • These plans combine all your unsecured debts into one manageable loan with a lower interest rate
   • Think of it as hitting the “reset” button on your debt

4. Talk to Your Bank

   • Banks aren’t the villains they seem to be
   • Many are willing to help restructure your payments if you reach out early
   • Don’t wait until they’re calling you multiple times a day!

5. Get Professional Help

   • Speak with a financial advisor
   • Contact Credit Counselling Singapore for assistance
   • They’re there to help, not judge

Are Credit Cards Bad? 🤔

Credit cards aren’t inherently evil—they’re just tools. Like any tool, their value depends on how you use them.

Pros:

• Rewards and cashback opportunities
• Convenience in daily transactions
• Help build credit score when managed responsibly
• Useful for emergencies

Cons:

• High interest rates (typically around 20% per annum)
• Temptation to overspend
• Late payment fees can be substantial
• Debt can compound quickly if not managed well

The key lies in understanding how credit works and using it wisely. Always pay your balance in full or, at the very least, more than the minimum amount to avoid unnecessary charges.

Lessons We Can Learn 🧠

This story might seem extreme, but it’s a reality for many Singaporeans. Our relationship with credit cards often comes down to a lack of understanding about how they work—and how quickly debt can spiral out of control.

Remember:

• A small debt can become a huge burden if ignored
• Minimum payments are a trap that keep you in debt longer
• Early action is crucial when facing financial difficulties
• There’s always help available if you’re willing to seek it

If this hits close to home, remember: you’re not alone, and it’s never too late to take control. As for our friend whose $648 turned into $11,000? Let his experience serve as a wake-up call for all of us about the importance of responsible credit card use.

Don’t let a simple swipe snowball into something unmanageable. Take charge of your financial health today—your future self will thank you.

Have a credit card horror story or tips on managing debt? Share with us here! Let’s break the cycle together. 💪