When your credit card statement arrives, you’ll notice two key amounts — the total amount due and the minimum amount due.
Paying the minimum due may seem convenient, but is it financially wise?
Let’s break down what it means, when it can help, and how it can also cost you more in the long run.
What Is the Minimum Due on a Credit Card?
The minimum due is the smallest amount you must pay to keep your account active and avoid late payment penalties.
It’s usually around 5% of your total outstanding amount, including:
A portion of the principal balance
Interest from previous months
Applicable taxes or fees
If your total bill is ₹50,000, your minimum due might be around ₹2,500–₹3,000.
Paying this amount by the due date prevents late fees — but not interest.
Pros of Paying Only the Minimum Due
✅ 1. Avoids Late Payment Fees
Paying the minimum helps you avoid penalties (which can be ₹500–₹1,200 per month depending on the card issuer).
✅ 2. Keeps Your Credit Card Active
If you’re low on funds, paying the minimum ensures your credit card account stays in good standing, preventing suspension or negative remarks.
✅ 3. Protects Your Credit Score (Temporarily)
Timely minimum payments show as “on-time” in your credit report — helping you maintain a positive credit history, as long as you don’t default.
✅ 4. Provides Short-Term Relief
During emergencies or financial crunches, paying the minimum gives you a temporary cushion to manage cash flow.
Cons of Paying Only the Minimum Due
⚠️ 1. You’ll Pay High Interest
The biggest drawback — interest continues to pile up on the remaining balance.
Credit cards charge around 30–42% annual interest (2.5–3.5% monthly).
So, if you roll over ₹47,000, interest on it could be around ₹1,400–₹1,700 per month.
⚠️ 2. Debt Trap Risk
Paying only the minimum creates a revolving balance — meaning you keep paying interest without reducing your debt much.
This can easily spiral into a credit card debt trap.
⚠️ 3. No Interest-Free Period
When you carry forward even ₹1, your interest-free grace period for new purchases disappears.
Every new swipe immediately attracts interest until you clear your entire balance.
⚠️ 4. Credit Utilization Rises
High outstanding balances increase your credit utilization ratio, which can hurt your credit score over time.
⚠️ 5. Long-Term Financial Stress
What seems like a small payment now can lead to thousands of rupees in interest and years of repayment if you keep paying only the minimum due.
When Paying the Minimum Might Be Acceptable
Short-term cash crunch (e.g., medical emergency or delayed salary)
Unexpected expense months, where full payment is not possible
When you plan to repay the balance soon (within weeks)
However, it should be treated as a temporary solution — not a habit.
Better Alternatives
Convert to EMI:
Many banks let you convert large bills into monthly EMIs with lower interest rates (12–18% p.a.).
Use a Personal Loan or NBFC Loan:
If debt has piled up, consider a low-interest loan from NBFCs like Vizzve Financial to clear your card balance and reduce interest burden.
Pay More Than Minimum:
Even paying double the minimum due significantly reduces future interest costs.
Track Expenses:
Limit your card spending to what you can repay each month.
Conclusion
Paying only the minimum due might help you avoid immediate penalties, but it’s not a smart long-term strategy.
It keeps you in debt, increases interest charges, and affects your credit health.
The golden rule: Always pay the full bill if possible.
If not, pay as much above the minimum as you can and plan to clear the balance soon.
A disciplined repayment habit ensures financial stability and a strong credit score — both essential for future loans and credit opportunities.
FAQs:
Q1. What happens if I pay only the minimum due?
Your account remains active, and you avoid late fees — but the remaining balance continues to accrue high interest, increasing your total debt.
Q2. Does paying minimum due affect my credit score?
Initially, no. As long as you pay on time, it’s considered “on-time payment.” But if your balance stays high, it can reduce your credit score over time due to high utilization.
Q3. Is it better to pay the minimum due or the full amount?
Always try to pay the full amount. Paying only the minimum should be a last resort, used only during emergencies.
Q4. What is the interest rate on unpaid credit card balances?
Most credit cards charge between 30% and 42% per annum, depending on the bank. Interest is compounded monthly.
Q5. Can I convert my credit card dues into EMIs?
Yes. Many banks allow you to convert your dues into EMIs at lower interest rates — a good option if you can’t pay the full amount at once.
Q6. What if I skip the minimum payment too?
If you don’t pay at least the minimum due, you’ll face late fees, interest penalties, and your credit score will drop sharply.
Published on : 8th November
Published by : SMITA
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