August 29, 2025 · 10 mins read
Santosh Kumar
Credit cards have become a necessary component of everyday life. It has evolved into more than just a convenience. Credit cards can be used for anything and everything, whether you're using them to order food, book a cab, or pay for groceries. Credit cards offer cashback, discounts, and rewards in addition to flexibility. However, there is some confusion that comes with this convenience, especially regarding a common problem: people paying the "minimum due" but still receiving expensive or late fees. If you have ever asked yourself, “I paid the minimum due on my credit card, so why am I still being penalised?” you are not alone. This misunderstanding is one of the biggest reasons Indian cardholders fall into credit card debt traps.
Let us unpack this issue step by step and look at what happens when you pay the minimum due, why late fees and interest still appear, and how you can avoid being caught in this cycle.
The total amount due is the full bill. It includes all your shopping, payments, fees, and any money you still owe from the last month.
The minimum amount due, often called MAD, is a much smaller part of this bill, usually about 5% of the total. This is the least amount the bank asks you to pay so that your card does not go into default.
Paying only the minimum can feel easier, but it means the rest of your bill keeps adding interest. Over time, this makes your debt grow bigger and harder to clear.
The minimum due seems like a sensible choice at first. The minimum amount owed could be as little as ₹1,000, even if your bill is ₹20,000. "Great, I can clear this small amount now and deal with the rest later," you may be thinking. Paying the minimum due is not the same as clearing your bill. It simply means the bank won’t immediately classify you as a “defaulter.” The unpaid balance continues to attract interest, which in India is often between 30% to 40% annually.
This is the most frustrating part for many people: they see “minimum due paid” on their statement, but they still find late fees and interest charges the next month. The reasons are simpler than you think, though they are not always explained clearly by banks.
If you paid the minimum due after the due date, the bank still charges a late fee. The minimum due only protects you from late fees if it is paid on or before the due date. Another reason is the misconception that minimum due clears your bill. It doesn’t. You avoid late fees if you pay on time, but you still pay heavy interest on the remaining balance.
Many people also withdraw cash using their credit cards. Unlike regular card transactions, cash withdrawals have no interest-free period. The interest starts from the day you withdraw the money, and on top of that, banks also charge a cash advance fee of about 2.5% to 3% of the withdrawn amount. Even if you pay the minimum due, those cash withdrawals keep attracting immediate interest, which shows up on your next bill as “finance charges.”
Another silent killer in this process is GST. In India, the Goods and Services Tax of 18% is applied not only to your purchases but also to interest charges, late fees, and other penalties. So, if you carry forward a balance, the bank charges interest, and then GST is added on top of that interest. Suddenly, your bill looks a lot bigger than expected.
If your statement was generated on the 10th and you paid the minimum due on the 15th, any new transactions after the 10th gets added to your balance. These are not covered by the payment you made, and if unpaid, they attract interest and possibly late fees if ignored.
Also Read: How to Choose a Card Based on Your Spending Pattern?
On the surface, the minimum due option looks like a relief. It prevents you from being labelled as a late payer and saves you from an immediate late fee. But it comes with a dangerous catch: the unpaid balance continues to grow with high interest rates. In fact, this is how many Indians fall into the so-called “credit card debt spiral.”
Let’s look at an example. Imagine your monthly bill is ₹30,000. The minimum due is ₹1,500. You pay that amount on time. What happens next? The remaining ₹28,500 continues to attract interest of about 3% per month. That is ₹855 in finance charges, plus GST of ₹154. So, your new balance next month is ₹29,509. In other words, even though you “paid on time,” your debt has grown. Repeat this cycle for six months, and your ₹30,000 balance could easily become ₹38,000 or more.
This shows how minimum due is not really a solution; it is simply a way of delaying the inevitable while making your debt larger.
Always try to pay the entire amount owed before the due date. At least pay more than the minimum amount owed to keep your balances from going out of control.
Consider creating bank account-linked auto-debit instructions if you frequently forget deadlines. In this manner, you avoid needless late fees because at least the entire bill or a sizable portion is paid automatically each month. Withdrawals of cash from your card should only be made in an emergency because they are immediately charged and do not have an interest-free grace period.
Another important factor is keeping track of your expenses. Nowadays, the majority of banks offer mobile apps that let you keep an eye on transactions. Configure alerts to notify you when your budget is approaching.
Also Read: What to Do If There’s an Error in Your Credit Card Statement?
Credit cards in India are still relatively new compared to countries like the US, and financial literacy around them is limited. Many Indians treat their credit card like an extension of their salary. They think of the limit as “extra money” rather than as debt. That is why terms like “credit card minimum due paid” often create false confidence. People think that paying the minimum due means they are safe, when in reality, it only postpones the problem while adding more charges.
Banks design credit cards this way intentionally. Interest rates on cards are some of the highest in the financial world, and late fees plus GST add to their revenue. .
Test a new credit card for two or three months before fully committing. Use the card for your regular expenses and see how it affects your spending. Treat this trial run as a financial experiment. If you find that the card is adding stress rather than helping, it’s better to switch to a simpler, low-fee option.
Also Read: Refund Delayed on Credit Card – What to Do?
1: Always pay your full bill before the due date. This is the single best way to avoid both interest and late fees.
2: Use credit cards like a debit card with perks—spend only what you already have in your bank account.
3: Avoid cash withdrawals as the fees and interest start immediately, and are extremely expensive. Keep your utilisation under 30% of your credit limit.
4: Pick the right card for your lifestyle. A premium travel card makes sense only if you travel often. Otherwise, a simple cashback card can save you more in the long run.
Having a credit card can simplify your life. They provide incentives, save time, and even serve as a fallback in case of emergencies. However, they only benefit you if you know how to use them effectively. Paying the minimum amount owed may seem like a quick fix, but if you're not careful, it can still result in late fees and the accumulation of interest. "I paid my credit card minimum due, so why am I still being charged extra?" is a question that many people eventually ask.
Every month, pay your entire bill on time. You can avoid late fees and interest in this way.
Additionally, keep in mind that cash withdrawals from your card carry significant fees.
The ideal credit card is the one that complements your lifestyle without becoming a hassle. It should provide you with ease, meaningful rewards, and peace of mind—not restless nights over money. It might be time to reconsider how you use your card or even move to a more straightforward option if it causes you anxiety every billing cycle.
Also Read: How to Check if Your Credit Card Suits Your Budget?
Paying the minimum due will not directly damage your credit score. However, the unpaid balance keeps attracting heavy interest, and if it grows beyond your ability to manage, you might miss payments later. At that point, your credit score takes a hit. So indirectly, yes, depending only on minimum due payments can hurt your score in the long run.
Most likely, you paid the minimum amount owed after the deadline. Only when the minimum amount owed is paid on time or earlier does the bank waive the late fee. You will be charged if you are even one day late for the date.
Most banks calculate 5% of the total outstanding balance as the minimum due. They also add in instalments from EMI conversions, past dues, and charges. So, the number you see as minimum due is not just a percentage; it is a mix of different components based on your spending.
No, if you pay on time, paying the minimum amount owed only helps you avoid a late payment fee. Interest is still charged on the outstanding balance as of the transaction date. You must pay the entire amount due each month to avoid interest.
This occurs as a result of the residual balance growing at a rate of about 3% per month plus GST. Therefore, once finance charges are applied, the remaining balance may exceed your initial debt, even if you paid the minimum amount of ₹2,000.
Yes, converting the credit card payment to EMI is preferable to carrying forward unpaid balances. Compared to the 30% to 40% interest rates applied to outstanding balances, EMI conversion interest rates are lower, ranging from 12% to 18%.
Avoiding cash withdrawals, using cards that fit your lifestyle, paying your bills on time, and spending no more than 30% of your credit limit are the best practices. In addition to avoiding debt, this raises your credit score, which makes it possible for you to get better loans and deals down the road.
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