Minimum Due: Know the math of Minimum Due in Credit Card Payment, are you being a victim of atrocities by companies?

Photo:FILE credit card payment


  • If you are unable to pay the full bill, then you can also pay the Minimum Due.
  • The minimum amount due is actually a part of your total bill.
  • Normally the minimum amount due is 5% of your total outstanding

Minimum Due : People often consider the credit card as a magic wand. We are told lakhs not to spend more than your limit. But the heart is the heart, I do not believe it, where whatever you like, then your hand is directly on the pocket, the card is swiped and the thing is yours. But in this we forget that at the end of the month, you have to pay the expenses. Credit card companies understand the distance of your heart, mind and pocket very well. This is the reason why these companies give you a facility, which they do Minimum Amount Due.

Minimum Amount Due entices you in the bill

If you look at your credit card bill carefully, you will see the full amount of the bill. Also, the option of Minimum Amount Due will also appear in the next box. Minimum Amount means that if you are unable to pay the entire bill, then you can pay this amount as well.

Do not take a sigh of relief by paying minimum due

If you do Minimum Amount Due in the bill of a month, then it should not be considered as enough. This does not at all mean that you have been discharged from the credit card bill. It is kind of a debt trap. The money that the company takes from you every month in the name of Minimum Amount Due, is consumed only in interest and file charges. Your original amount remains the same.

What is Minimum Amount Due

The minimum amount due is actually a part of your total bill. This gives you relief from additional penalties like credit card late payment fees. But you will have to pay around 3 to 4% per month on the entire bill. Accordingly, you will pay about 40 to 50 percent interest annually. That too will have to be paid from the day you made the purchase.

Minimum Amount Due calculation of

Normally the minimum amount due is 5% of your total outstanding. But this amount may vary from bank to credit card. If the total outstanding amount on your credit card bill is high, it may be less than five per cent of that amount. If the total bill amount is less then it can also be around five per cent.

Is there any harm in this?

Yes. Paying only the minimum amount due in the credit card bill can land you in a debt trap. Because, this amount is used for payment of interest and not for payment of principal amount. Interest will continue to be charged until you have cleared your dues completely. At the same time, you have to pay interest up to 50 percent. which can be classified as an offence.

Is CIBIL report bad? (Cibil Score)

Often banks tell you that the CIBIL score does not deteriorate if you pay the minimum amount due. But experts say that when your loan amount remains or continues to increase instead of decreasing, then the CIBIL score is bound to deteriorate. Not only this, the bank will identify you as a customer who is short of liquidity. It is possible that such a customer may fall into the vortex of debt in the coming days.

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Shivam Bangwal

Shivam Bangwal is an Indian based entrepreneur who is a tech, travel and coding enthusiast with a post graduation degree on Master's of Computer Applications. He is a founder of Youthistaan, People News Chronicle, Hitchhike TV, Branding Panther and many more.
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