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Vidhi Chauhan
Vidhi Chauhan is a copywriter and content writer with extensive experience creating high-quality, SEO-driven content across multiple industries, with a strong focus on fintech. She has written extensively on GST, banking, personal loans, business loans, credit cards, income tax, insurance, and other financial topics, helping Indian readers understand complex concepts through clear, accurate, and engaging content.
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Paying only the minimum amount due on a credit card can help you avoid being marked as late for that billing cycle, provided the payment reaches the card issuer by the due date. However, it does not clear your entire credit card bill. The remaining balance is carried forward and may attract finance charges according to the card's terms and conditions.
This can make a credit card balance take much longer to repay and increase the overall cost of borrowing. SBI Card states that paying only the minimum amount due every month can stretch repayment over several years with interest payable on the outstanding balance.
Key Takeaways
The minimum amount due (MAD) is the minimum payment that a cardholder should make by the payment due date so that their account stays clear of any adverse actions. Usually, the minimum amount due is just a small fraction of the total amount that appears on the credit card statement.
The calculation of the minimum amount due depends on the credit card company and the type of card. For instance, the current terms of SBI Card include GST, EMI dues, fees and charges, finance charges, overlimit amount, and a part of the outstanding balance. On the other hand, HDFC Bank also has a minimum amount due that is calculated according to its card terms.
Therefore, when looking at one’s minimum amount due on the monthly bill, one should consider it to be specific to one's card, instead of looking at some generalised credit card minimum amount due.
When you pay the minimum amount due instead of the total amount due, the unpaid portion does not disappear. It remains outstanding and can be carried forward to the next billing cycle.
For example, suppose your credit card statement shows a total amount due of ₹20,000 and a minimum amount due of ₹1,000. If you pay ₹1,000 by the due date, the remaining ₹19,000 is still outstanding, subject to the applicable finance charges and other terms of your card.
SBI Card specifically states that cardholders can use the revolving credit facility by paying the minimum amount due, with the outstanding balance carried forward to subsequent statements.
One of the main consequences of paying only the minimum due is that the unpaid balance can attract finance charges.
ICICI Bank states that cardholders paying less than the amount due can incur finance charges on outstanding balances and new transactions until previous dues are paid. Its terms also state that the interest-free period does not apply when the previous month's balance remains unpaid.
The exact rate and calculation method depend on your card's terms and conditions. Therefore, check the finance charge rate mentioned in your card's schedule of charges before estimating the cost.
Carrying a balance can affect the treatment of subsequent purchases. Depending on the card's terms, new transactions may also attract finance charges when the previous balance has not been paid in full.
For example, Axis Bank's credit card terms explain that interest can be charged on transactions during a period when the cardholder is using revolving credit after paying less than the total amount due in the previous month.
This means continuing to use the card while carrying an unpaid balance can make repayment more difficult.
A minimum payment may look manageable because it is considerably lower than the total outstanding amount. The problem is that a relatively small payment may not reduce the principal balance quickly once finance charges and other applicable amounts are taken into account.
SBI Card provides an illustration in which a ₹10,000 transaction, when only the minimum amount due is paid every month, can take up to 52 months to repay under the assumptions in its example.
The actual repayment period for another card will depend on its interest rate, minimum-due formula, outstanding balance, fees and future transactions.
Paying the minimum amount due on time is different from missing the minimum payment. If you make at least the required minimum payment by the due date, the account is not the same as an account where the required payment was missed.
However, carrying a high outstanding balance can keep a larger portion of your available credit in use. Credit-reporting and scoring outcomes depend on the information reported and the scoring model used, so it is better not to assume that paying only the minimum will automatically increase or decrease your credit score by a particular amount.
The key point is that paying the minimum due should not be confused with paying the credit card bill in full.
The two amounts serve different purposes:
*T&C Apply
Can extend over multiple billing cycles
The exact treatment of interest and the interest-free period depend on the credit card's terms. ICICI Bank, for example, states that its interest-free period does not apply when the previous month's balance remains unpaid.
Paying the minimum due can be useful when you temporarily cannot pay the entire bill. Making the required minimum payment by the due date can help you avoid the consequences associated with failing to make the required payment.
However, it should not be viewed as a long-term repayment strategy. SBI Card notes that making only the minimum payment every month can stretch repayment over years and result in interest being paid on the outstanding balance.
If you cannot clear the total amount, paying more than the minimum whenever possible can reduce the outstanding balance faster, although the exact financial benefit depends on the applicable interest and charges.
If you are unable to pay the total amount due, first make sure that at least the minimum amount reaches the card issuer by the stated due date. Then check your statement for the outstanding balance, finance charges, fees and the next due amount.
Avoid making unnecessary new purchases on the card while trying to clear the existing balance. Also check whether your card issuer offers a suitable EMI or repayment option and carefully review its interest rate, fees and terms before choosing it.
Paying only the minimum amount due keeps you from leaving the required payment completely unpaid, but it does not clear your credit card balance. The unpaid amount can be carried forward and may attract finance charges, while continued use of the card can increase the outstanding balance further.
For this reason, paying the total amount due by the payment deadline, whenever financially possible, can help avoid revolving credit charges on eligible purchases. If you can pay only the minimum, understand the applicable charges and make a plan to reduce the outstanding balance rather than relying on minimum payments indefinitely.
Yes, in general, there is no problem paying more than the minimum amount, but this is dependent on the payment conditions of your card-issuing institution. By paying more than the minimum amount due, you will decrease the amount due after the payment.
The minimum amount due is listed separately from the total amount due in your credit card statement. Also, you may use the issuing bank’s mobile application and the Internet banking service.
Yes, the minimum amount due varies each month because it is computed based on the transactions, dues, and charges, among others, of the said billing period. The computation varies according to the card issuer and variant.
The billing cycle is the time duration in which the transactions and corresponding charges are logged for the credit card bill statement. The statement generated by the conclusion of the billing cycle is inclusive of the amount that needs to be paid and the due date for making the payment.
The delay in making the payment may lead to late payment charges, depending on the agreement associated with the card. Also, the issuer may share the payment details with the credit bureaus, according to the applicable policy.
There are a lot of eligible credit cards for which the payments are made using UPI through the available payment methods and mediums.
While some card issuers offer EMI options for eligible transactions or outstanding amounts, the eligibility criteria, interest rates, processing charges, minimum amount required, and the tenure of repayment may vary across card issuers.
No, it can vary from one issuer to another or even for different credit card products of the same issuer.
The usage of the credit card would depend on the available credit limit in the card account post-payment. It might take some time to be updated based on the payment mode and the bank issuing the card.
You could check the same by logging into the mobile banking app, online banking, or by checking the latest statement of the credit card account issued by the bank.
