Your credit card minimum payment is designed to feel convenient. It gives you immediate relief by paying only 5–10% of your balance, but what they do not tell you is that the remaining balance immediately starts generating interest — at rates between 24% and 32% per year. It is one of the most expensive financial mechanisms that exists for Colombian consumers.
Suppose you owe $3,000,000 on your card at 28% per year. Your monthly minimum is approximately $150,000 (5%). If you only pay that minimum, most of it goes to interest and a small fraction to principal. In the next cycle you owe almost the same plus new interest. If you do the math: paying only the minimum on a $3,000,000 balance at 28%, it will take more than 7 years to pay off and you will have paid more than $5,000,000 in additional interest — more than double the original balance.
There are three strategies: paying the full balance (avoids all interest), paying the minimum (the most expensive in the long run), and paying a fixed amount greater than the minimum. If you pay $400,000 per month instead of $150,000 on that $3,000,000 balance, you pay it off in less than a year and pay a fraction of the interest. The difference between paying the minimum and paying twice the minimum can save you millions of pesos.
Credit cards in Colombia have a grace period of approximately 25–45 days. If you pay the full balance before the due date, you pay zero interest. This means you can use your card as a zero-cost tool if you pay it in full each month. The problem arises when you start carrying a balance. Once you pay less than the total, the grace period disappears and all transactions start generating interest from the day of purchase.
If you are already trapped with a high balance: first, stop using the card for new expenses (or only use it if you can pay them off by the same billing date). Second, pay as much as possible above the minimum each month. Third, if you have multiple cards, use the avalanche method: prioritize the one with the highest interest rate. Fourth, consider refinancing with a personal loan at a lower fixed rate to pay off the card debt.