What is the minimum amount due on credit cards?

The credit card minimum amount due - or the credit card minimum payment - is 5% of the total outstanding amount. The minimum amount due in credit cards can also include any EMI payment conversions that you might have made using your card. In the event of an unpaid balance remaining from the previous billing cycle, or if you exceed your credit limit, that amount is also added to the credit card minimum due/payment amount.

How to calculate the minimum amount due on credit card?

The minimum amount due is set at 5% of the total outstanding balance -- as is calculated on the date of statement generation -- by most card issuers.

Benefits of paying the minimum Credit Card amount

There are numerous benefits of paying the minimum amount while making timely payments.

  • In doing so, you continue to keep your credit active, and can use the card for the total available credit limit minus the amount converted to EMIs
  • Your credit score remains protected, as the bank will not classify your payment as a ‘default payment’ in the credit record if you pay the amount on time
  • The chances of late payment fee being levied are completely eliminated
  • Helps you manage your finances better if in the midst of financial crisis


Risk of paying the Credit Card minimum due

  • Upon paying the minimum amount, the rest of the balance gets carried forward, and interest is charged on that amount
  • For every month that you delay full payment, the minimum amount increases for that month, as the balance amount of one month is added on to the minimum amount of the following month
  • Credit card interest rate varies between 35-40% on a yearly basis, as it is calculated every day on the basis of the outstanding amount
  • Interest on the credit card is charged from the date of the purchase, and not from the end of the billing cycle. This means that when you only pay the minimum balance, you automatically incur interest on that amount from the very first day, and cannot take advantage of the credit-free period
  • The credit limit that is made available to you is reduced depending upon the extent to which the amount is not repaid. This may prevent you from being able to swipe the card as per your requirements

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