You’re paying installments, but your debt barely decreases? Check where your money is going

The reason is usually simple: part of each installment doesn’t pay off the debt, but only covers interest and fees.

The higher the interest rate, the more you pay just for using borrowed money.

Let’s assume you have three obligations in Norway:

• 40,000 NOK in credit card debt,
• 100,000 NOK in a consumer loan,
• 10,000 NOK in purchases financed over a longer period.

Altogether, you have 150,000 NOK in debt.

Let’s use the following for a simple calculation:

• credit card: 22% annual interest,
• consumer loan: 15%,
• long-term purchase financing: 20%.

In this case, the interest costs look roughly like this:

Credit card
40,000 NOK × 22% = about 8,800 NOK in interest per year, or about 733 NOK per month.

Consumer loan
100,000 NOK × 15% = about 15,000 NOK per year, or about 1,250 NOK per month.

Installment purchases
10,000 NOK × 20% = about 2,000 NOK per year, or about 167 NOK per month.

Altogether, that’s about:
25,800 NOK in interest per year
which is about:
2,150 NOK per month.

This is a simplified calculation, without additional fees. However, it shows the most important thing: even if you pay 4,500 NOK in installments each month, at first about 2,150 NOK may only cover the cost of the debt. Only the remaining part actually reduces the debt.

That’s why you pay, but the balance drops slowly.

A credit card is expensive if you don’t pay it off in full

A credit card itself doesn’t have to be a problem. If you use it and pay off the entire bill on time, you might not pay any interest at all.

The problem starts when you only pay off a small part of the debt.

The rest rolls over to the next month. The bank charges interest on it, and the debt can stay with you for a long time.

It’s especially risky to regularly pay only the minimum amount. The installment seems small, but the debt decreases very slowly.

A consumer loan is more predictable, but can still be expensive

A consumer loan, or Norwegian forbrukslån, usually has a fixed installment and a set repayment term.

It’s easier to see when the loan should be paid off.

However, that doesn’t mean it’s cheap. Forbrukslån is not secured by a home or car. That’s why its interest rate is usually much higher than a mortgage.

With such a loan, don’t just look at the installment amount. Also check how much you’ll pay in total over the entire repayment period.

Klarna and “buy now, pay later” also strain your budget

A single payment of 500 NOK doesn’t seem dangerous.

The problem comes when you have several such purchases at once:

• phone,
• clothes,
• home furnishings,
• tickets,
• electronics.

Some deferred payments may be free if you pay everything on time. Longer financing or delays, however, can mean interest and extra fees.

That’s why you should treat Klarna purchases just like other obligations. That’s money that will be taken from your future paychecks.

Don’t forget about card limits

You might have a card with a 100,000 NOK limit and owe nothing on it.

This is not used debt, but such a limit can still matter when applying for another loan. The bank sees that you could use the available funds at any time.

That’s why it’s good to check not only your debt, but also:

• how many cards you still have,
• what their limits are,
• whether you really need all of them.

An old card lying in a drawer may still have an active, high limit.

How can you quickly estimate interest yourself?

For a simple calculation, you can use the formula:
debt amount × annual interest rate ÷ 12

Example:
50,000 NOK × 20% ÷ 12 = about 833 NOK per month.

This is not an exact bank calculation. The balance decreases as you repay, and various fees may apply to the loan.

However, the formula lets you quickly assess the scale of the problem.

When comparing offers, pay attention to the effective interest rate, or effektiv rente in Norwegian. It includes not only interest, but also mandatory fees.

This indicator better shows the real cost of the loan.

Can refinancing help?

Refinancing means replacing several expensive obligations with one new loan.

The new loan pays off, for example:

• credit cards,
• consumer loans,
• other expensive obligations.

Instead of several installments, you’re left with one payment and one due date.

Refinancing doesn’t erase the debt. However, it can reduce its cost if the new interest rate is lower.

Let’s return to our example.

The current debt is 150,000 NOK, and the estimated interest cost is about 25,800 NOK per year.

If you could replace these obligations with one loan at 10% interest, the interest would initially be about:
15,000 NOK per year.

The difference is about:
10,800 NOK per year.

This is just an example to show the principle, not a promise of a specific offer. The actual result depends on the interest rate, fees, and repayment time.

A lower installment doesn’t always mean a cheaper loan

Refinancing can also lower your monthly installment by extending the repayment period.

This helps with your current budget, but doesn’t always mean savings.

If you repay the loan much longer, you may end up paying back more money overall, even with a lower installment.

That’s why you should check:

• the new effective interest rate,
• the monthly installment amount,
• the repayment period,
• the total amount you’ll pay back.

It’s also important what happens to your old cards. If after refinancing you use their limits again, you could end up with a new loan and new card debt at the same time.

First, see the whole picture

Before applying for another loan, it’s worth checking:

• the total amount of debt,
• all loans and cards,
• amounts used,
• available limits,
• the sum of monthly installments.

In GjeldsMonitor, you can see your loans, cards, and limits in one place and in Polish.

First, check the numbers. Only then decide whether it’s better to pay off your current obligations faster, close unnecessary limits, or look into refinancing.

Log in to GjeldsMonitor and check your current debt status.

The repayment period is from 1 to 15 years, and without refinancing – 5 years. The nominal interest rate ranges from 6.9% to 40.0%. The effective interest rate ranges from 7.5% to 49.7%, so choosing the best offer can save you a lot. Example: The interest rate is variable and set individually. 310,000 kr over 5 years, nominal 11.39%, effective 12.00% cost. 6,801 kr, total 408,036 kr. Repayment period 1–15 years. Actual interest rate: 6.82%–48.76%.