® 
Is your Credit Score >750?
- Get low interest loans & Lifetime FREE credit cards
- Get customized Credit Health Report
- Improve your creditworthiness
Get your FREE Credit Score & Report in just 2 minutes
In simple words, a minimum due amount on a credit is the minimum money that the cardholder is required to pay on or before the payment due date. Generally, the minimum due on a credit card is calculated as 5% of the total due amount.
Nowadays, a credit card has become one of the most common payment methods. Many people like credit cards because they help manage money when you don't have cash. Credit card issuers determine spending limits by considering your income and credit history.
But be careful. Credit cards are only good if you use them wisely. Pay your full bill on time to avoid interest. If you can't pay the whole bill, pay at least the minimum amount to avoid extra charges.What's on Your Credit Card Bill?
- Total Amount You Owe: This is the total money you owe for using your credit card.
- Minimum Payment: The minimum monthly amount owed.
- Due Date: The day you need to pay your bill by.
Minimum Amount Due on a Credit Card
The minimum amount due is the smallest amount you must pay on your credit card bill. Submit this payment promptly to prevent late charges and enhance your credit history. It's usually a small part (5%) of your total bill.
For example, if you owe Rs. 20,000 and the minimum payment is 5%, you must pay Rs. 1,000. But you still owe the rest (Rs. 19,000) and will pay interest on it.
Paying only the minimum keeps your account okay, but it's better to pay the whole bill to avoid extra charges.
How Does the Minimum Payment on Your Credit Card Work?
The minimum payment is the smallest amount you can pay on your credit card each month instead of paying the whole bill. This keeps your account in good standing by preventing late fees. But be cautious: your bank might charge more interest if you don't pay the full amount.
Your credit card company usually sets the minimum payment as a percentage of what you owe. Some banks might also have a fixed minimum amount. If your balance is lower than the minimum due, you'll need to pay it all off.
Important: Different banks have different minimum payment policies. Make sure you understand yours before you get a credit card.
Advantages of Paying the Minimum Due
Paying the minimum amount due each month has some benefits.
- The minimum amount due (MAD) is the smallest amount you must pay your credit card company by the due date. This keeps your credit card active.
- If you pay the minimum amount due, you'll only pay interest when needed. You won't have to pay any extra fees or late charges.
- Your credit card company won't report you to the credit bureau as a bad payer if you pay the minimum amount on time.
- Missing credit card payments hurts your credit score. To avoid this, pay at least the minimum amount due on time.
Want to know your credit score? Check it for free on CreditMantri.
Risks of Paying the Minimum Amount Due
Only paying the minimum amount on your credit card can cause big problems.
- You’ll pay a lot more in interest. Credit cards have high interest rates. By paying only the minimum, you're primarily paying interest, not reducing your debt. This means you’ll end up paying much more than you borrowed.
- Your debt will take longer to pay off. You'll carry your debt for an extended period with minimum payments. This can be a big financial burden and make it hard to save money.
- Your credit score will go down. When you owe a lot on your credit card, it hurts your credit score. Lenders use this number to decide if they’ll give you loans.
- It’s harder to get loans. If your debt keeps growing, it’s harder to get loans or credit cards. Lenders think you’re a risk.
Tips to Avoid Late Payment Fees
Late payments can hurt your credit score. Here’s how to avoid them:
Set Reminders
Use email or phone alerts to remind yourself when your credit card bill is due.Automate Payments
Many banks let you automatically pay your credit card bill. This makes sure you never miss a due date.Use Electronic Clearing Service (ECS)
Set up ECS to automatically pay your credit card bill from your bank account. You’ll get a text or email when it happens.Make Payments a Priority
Treat your credit card bill like any other important bill. Save money to pay at least the minimum, or the whole bill if you can. This helps your credit score.Track Your Spending
Carefully observe your credit card spending habits. Make sure you have enough money to pay the bill. This helps you plan your finances.Frequently Asked Questions:
1. How much is the smallest payment I must make for my credit card?
The minimum payment you must make by the due date is a small part of your total credit card bill. Submit this payment to avoid late charges and build a strong credit history.
2. What happens if I only pay the minimum due amount on my credit card bill?
Your debt will take significantly longer to repay if you only pay the minimum. You'll pay more money because of interest, and it can hurt your credit score.
3. What happens if I don't pay my credit card bill on time?
If you're late with your credit card payment, you'll pay extra fees and interest and this can also hurt your credit score.
4. Will making only the minimum payment negatively affect my credit score?
Paying only the minimum amount can slowly hurt your credit score. This is because it shows you're using most of your credit limit.
5. What's the difference between the minimum payment and the full payment on my credit card?
The minimum payment is the least you can pay without getting a penalty. The full payment is the total amount you owe for your card, including what you bought, interest, and other charges.
6. What will happen if I only pay the minimum due amount on my credit card bill for a few months?
If you only pay the minimum amount on your credit card bill for a few months, you'll pay a lot more money in interest. You also won't get a period without paying interest. Plus, the bank might lower how much you can spend on your card.
Disclaimer: This page includes information that has been compiled from many sources and is only offered for informational purposes. Since this type of data might change over time, we cannot guarantee that the information supplied or included within it is accurate. It is anticipated that the user would confirm with the relevant source prior to taking any choices or actions.