When “utilities” become a vicious cycle of expensive debt.
Mr. Nguyen Van Minh, an office worker in Ho Chi Minh City with a salary of VND20 million, is a typical example of someone who has lost control of his finances. In order to make the most of cashback programs, he had four credit cards at different banks at the same time. However, because he did not check his bank statements regularly, he ran into financial difficulties.
Without proper cash flow management, consumers can easily fall into the “trap” of high credit card interest rates. (symbol image)
The first card he used to pay his living expenses only had the minimum payment of 5% per billing cycle. The second card was overdue due to missed payment deadlines. To pay off the debt on the second card, Mr. Minh decided to withdraw cash using the third card. What he didn’t realize was that interest on cash withdrawals (often up to 36-40% per year) would be charged immediately after leaving the ATM, without any interest-free period.
This pay-first, pay-later mentality drove him into a vicious cycle of compound interest. Because he was unable to pay off his debt in full, he was charged interest on all expenses from the transaction date, not just the balance. Month after month, his debt grew steadily due to accrued interest, late fees (up to 6%) and overdraft fees (8% to 15% per year). After just six months, his total debts exceeded VND150 million, almost eight times his monthly income, completely ruining him financially.
The situation for people like Mr. Minh is getting worse given the steep rise in interest rates in the banking sector from 2026. After the period of low interest rates, deposit rates at private banks increased by 25 to 50 basis points, increasing the interest rates on long-term savings deposits to 7.0% to 9.65%. In order not to reduce their net interest margin (NIM), banks are forced to increase lending rates. Credit cards, due to their high risk and unsecured credit structure, are always the first among the financial products whose prices are adjusted.
Currently, the interest rates for credit cards differ significantly. For example, state-owned banks such as Vietcombank charge interest rates between 18% and 22% per year. Premium cards like Infinite/Signature offer lower interest rates (18%) to attract customers with good credit.
For public companies like Techcombank, interest rates range between 31% and 35.4% per year, depending on the card type. MBBank offers a more competitive interest rate of 12% to 23.9% per annum, but charges very high late payment fees. International banks such as HSBC charge the highest interest rates in the market at up to 38.9% to 39.4% per annum for Live+ cards.
To qualify for low interest rates (typically under 20% per year), cardholders must be in the priority customer segment, have excellent credit, or use Platinum/Signature or higher value cards.
Annual fees for credit cards will also fluctuate widely in 2026, ranging from VND300,000 to VND600,000 for standard cards, while signature cards can cost up to VND1.5 million. However, many banks, such as Techcombank and MBBank, currently offer annual fee waivers when customers reach a minimum turnover (e.g. over VND250 million per year), or even a lifetime fee waiver for certain card types.
Identify financial “traps” and develop strategies for sustainable use.
In the volatile credit card market of 2026, it is not enough to just read the contract carefully to identify pitfalls; it requires an understanding of how cash flows work. One of the most common and insidious traps is the “minimum payment trap”.
Many users mistakenly believe that paying just 5% of their outstanding balance is enough to meet their payment obligations and avoid bank penalties. However, this is a dangerous mistake. By paying the minimum amount, cardholders not only pay interest of 30% to 40% per year on the entire balance, but also lose their right to interest-free transactions. This means that interest immediately accrues on every additional expense, putting users in a vicious circle of ever-increasing debt.
Market experience shows that “0% installment payment programs” also require special attention. Despite being advertised as interest-free, banks often charge a “conversion fee” of between 2% and 6.5% of the transaction value, depending on the term.
Cashless payments are becoming more and more common for users, but it is necessary to keep an eye on card payments in order to avoid interest traps.
At banks like VIB, setup fees and monthly administration fees can increase the total cost up to 18.49%. If converted to a debit card, this fee equates to a typical loan interest rate of 9-10% per year. Therefore, users should calculate the actual total amount to be paid and not rely solely on the “0% interest” statement in advertising banners.
Another serious risk that will emerge in 2026 is the illegal “card refund service” via POS devices. In order to avoid default in the CIC system in the event of insolvency, many cardholders turn to service providers who use their cards fraudulently in order to obtain cash with which they can pay off bank debts and extend the interest-free period.
Financial experts see this as a case of “wasting funds against the real debt trap,” which not only fails to address the cause of the debt, but also incurs additional fees of 1.6% to 4% per transaction for users. Even more dangerous, sharing card details with third parties poses the risk of data breaches, which can result in loss of account, permanent blocking of the card and entry on the bank’s blacklist for violating the terms of use.
Financial experts advise consumers to exercise strict discipline when spending money in 2026. First of all, you should always adhere to the rule of repaying your loan amount on time and in full. This is the only way they can use bank loans without paying interest.
Additionally, it is advisable to have a maximum of two credit cards with staggered billing cycles to optimize cash flow and easily manage repayment plans; and take full advantage of the features of digital banking apps, such as: E.g.: setting daily spending limits, enrolling in auto-pay, and enabling balance change notifications.
According to banks, at a time when creditworthiness has become a crucial factor, a clean payment history is invaluable. A good credit score not only helps customers avoid excessive interest rates, but is also a prerequisite for future approval of larger loans such as real estate or car loans at preferential interest rates.
Credit cards are inherently a key to convenience, but if not used wisely, they can become a tight noose and increase financial pressure on consumers’ lives.
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