What is the minimum amount due on credit cards?
The credit card minimum amount due is the amount that a cardholder is required to pay on or before the payment due date. Typically, the minimum amount due is calculated as 5% of the total outstanding amount.
The credit card minimum payment amount due also includes any EMI payment conversions you may have opted for. If you have an unpaid balance from the previous billing cycle or exceed your credit limit, that amount is also added to the credit card minimum due.
How to calculate the minimum amount due on your credit card?
The minimum amount due is usually set at 5% of the total outstanding balance, which is calculated on the date the statement is generated by most credit card issuers. This is the amount that you are required to pay before or on the due date of the payment.
For instance, your credit card company generates a statement on the 26th of every month and the due date is on the 5th of every month.
So, if you have made purchases worth Rs. 10,000 before the 26th, your minimum amount due will be 5% of the total payable amount (Rs. 10,000) i.e., Rs. 500. You have to pay this amount on or before the 5th of the next month to avoid late fees.
If you pay the minimum due of Rs. 500, you will not be charged any late fee. However, the remaining outstanding amount of Rs. 9,500 will continue to attract interest at 3.99% per month.
Date of transaction |
Amount (Rs.) |
Comments |
July 20 |
5,000 |
No interest or late fee is applicable. |
July 25 |
5,000 |
No interest or late fee is applicable. |
July 26 |
10,000 |
Your credit card statement is generated for Rs. 10,000. The minimum amount due is Rs. 500. |
August 5 |
500 |
The minimum amount due is paid. The outstanding amount of Rs. 9,500 will incur interest at 3.99%. |
Frequently asked questions
The minimum amount due is a fraction of the total outstanding amount that you have to pay to avoid late fees and cancellation of your credit card. Paying the minimum amount due ensures that your credit card services are active.
When you only pay the minimum amount due, the remaining outstanding amount continues to attract interest. However, by clearing the minimum amount due you can avoid late payment penalties and keep your credit card account active, while maintaining your credit score.
If you do not pay the minimum amount due on your credit card, you will be charged a late payment fee. Delay in bill payment would also lead you to lose your credit card interest-free period and increase outstanding interest.
You can check your credit card monthly billing statement to know your minimum amount due and the payment due date. The minimum amount due is calculated as a fixed percentage of the total outstanding amount in a billing cycle.
Paying only the minimum amount due will lead you to lose your interest-free credit period. If you continue to pay only the minimum amount due, your interest on the purchase amount will increase over time. So, not only would you have to pay high-interest charges on the total outstanding sum, but your credit limit will also be reduced due to the unpaid amount.
