July 22, 2025 · 11 mins read
Santhosh Kumar
Sometimes, it just happens that we make a lot of impulse purchases throughout the month, and when we receive the credit card bill, the cash flows are stretched already. In such scenarios, we would not always be able to pay the total outstanding amount in its entirety. Also, any balance that remains unpaid for the month accumulates high interest.
Here are some of the advantages of paying the minimum due every month.
1: The Minimum Amount Due (MAD) is the amount that you pay to the concerned credit card company on or before the due date to keep your credit card active and to keep the card account operative.
2: Making the Minimum Amount Due Payment will ensure that you will have to pay only the interest when required. There will be no penalty or late payment charges.
3: Your Credit Card Company or credit card issuing bank will not report you as irregular to the credit bureau if you make the Minimum Amount Due Payments on time.
4: If you do not make credit card payments on time, your credit score will be adversely affected. To avoid this, you can pay at least the minimum amount due, as mentioned in your credit card bill, on time.
5: Avoid penalties or legal action from lenders.
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Paying the minimum due probably won't derail your finances if you're in a pinch one month. But if you consistently carry a balance and make only the minimum payment, it could cost you. You may stay in debt longer and pay a lot more than your original balance, thanks to interest that typically compounds daily at high rates.
When you pay the minimum due, only a fraction of your payment is applied to the principal—the amount you charge to purchase goods and services. The rest of the payment is applied to the accrued interest, fees, and past-due balances. The table below illustrates how paying only the minimum affects your repayment timeline and the amount of interest you'll pay, assuming you stop using the card until you pay off the balance.
You can see how making minimum payments would affect your personal credit card balance by looking at your statement. The Credit Card Accountability Responsibility and Disclosure Act of 2009 requires card issuers to disclose this information on their statement each month.
One major advantage of making regular, full payments on your credit card is that you get interest interest-free credit period for up to two months. Not only that, you will also get up to three weeks' time to clear the outstanding amount after the statement is issued.
You will not be offered any interest-free credit period if you have paid only the Minimum Amount Due (MAD) and not the credit card outstanding in full. Rather, you will be charged an interest amount from the date of purchase.
The interest amount will also keep accumulating till you settle the dues. So, even if you have paid the Minimum Amount Due and have avoided paying any penalty for late payment, you will not be able to enjoy the benefits of interest interest-free credit period.
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There is an exception when paying only the minimum may not cost you. Cards with a 0% introductory APR allow you to make purchases without accruing interest for a set amount of time. You can completely avoid interest charges if you pay your balance in full before the interest-free period ends. But if you don't, one of two things will happen:
1: If the card has a zero-interest offer, the issuer will begin charging interest on the remaining balance when the promotional period ends.
2: If the card has deferred interest, the issuer will charge interest on all purchases starting from the transaction date (the date you made a purchase or balance transfer), not the end of the promotional period.
If you choose to take advantage of a promotional 0% offer, it's crucial that you pay at least the minimum due on time each month. If you pay late or miss a payment, the card issuer may terminate the promotional offer before it's set to expire.
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Yes, you can keep your credit card active by paying just the Minimum Amount Due every month. But you will have to pay high-interest charges, and also, there will be no interest-free credit period. Just remember that the less you pay the outstanding amount, you will be made to pay more in interest. Credit card debts are very expensive, and you must always make credit card payments in full. When there's a financial contingency or cash flow crisis in a particular month, you can just pay the Minimum amount due as an option. You will avoid credit score hits and late payment charges by paying the Minimum Amount Due - but this can only be a short-term arrangement.
In conclusion, you will have to cut down on expenses and revisit your budget if you constantly find yourself being able to pay only the Minimum Due amount. In case the credit card interest has become too much to bear, you can try personal loans or balance transfer options.
Credit cards have revolutionized the way people look at debt in India. For many, they are emergency ATMs that dispense plastic money in need. All is well while using the card, but when it comes to repaying the used amount, many cardholders tend to neglect it. They either make last-minute payments or pay only the minimum amount due, pushing the remaining balance to the subsequent months. While both are valid things to do, one should know the consequences of such activities.
Starting with making a credit card payment on the last date. Most of us have the habit of making last-minute payments. It may not be a good idea when it comes to credit card payments. Unlike other utility bill payments, credit card bill payments, through a few channels, don't get credited instantly. Banks typically take 2-3 days to process the payment based on the mode of payment. Hence, by making a payment on the due date, you will end up receiving a late payment penalty. You may assume that you have made the payment on time, but due to the processing time involved in credit card payment processing, your payment gets delayed. The receiving bank also considers the date on which the payment is received, not the date on which you have made the payment. Therefore, to avoid late payment fees, make sure to pay your credit card bill 2 to 3 days before the due date.
Coming to the minimum amount due (MAD) payment. There are some genuine instances wherein we cannot afford to pay the entire bill amount. In such instances, we don't have any other option except to pay the minimum amount due. But if you're doing it without knowing what exactly happens by paying the MAD alone, you must know the consequences.
Once you have paid the minimum amount due on your credit card, the card issuer will start levying interest on the remaining amount. Further, any subsequent purchases made on the card also attract interest till the amount is settled in full. This will increase your credit card bill with the added interest rates and the respective taxes.
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Paying in full is best to avoid high-interest charges, but that may not be possible every month. If you're strapped for cash and can't pay the total amount you owe, here are some tips to minimize the impact on your financial health.
Continue to pay at least the minimum. Paying the minimum will help you avoid late fees and other penalties. It will also keep your account current so late payments don't get reported to the credit bureaus.
Pay as much as you can afford. Credit card companies generally apply minimum payments toward interest, fees, and delinquent balances; any amount paid above the minimum amount due must go to the balance with the highest interest rate. Paying more than the minimum due will help you pay down your balance faster.
Minimize new charges. The more your balance grows, the more interest you have to pay. Reducing card usage can help keep your balance down, reduce the amount of interest that accrues, and avoid an increase in the minimum amount due.
Consider a balance transfer. Transferring an existing balance to a card with a 0% intro APR can be a good way to pay down debt while avoiding interest charges—if you have a plan for repaying what you owe before the promotional period expires. Balance transfer cards typically charge a balance transfer fee, so do the math before completing a transfer to ensure it makes financial sense.
Call your card issuer. Your credit card company may be willing to work with you if you're experiencing financial hardship.
Consider credit counseling. Credit counseling is usually provided for free or at a low cost by nonprofit organizations that help consumers learn sound money management habits. Credit counseling organizations also develop debt management plans to help you repay your debt. The plans don't eliminate what you owe, but the credit counselor may negotiate with your creditors for more favorable terms, such as lower interest rates, payment extensions, or waived fees. If you set up a debt management plan, you make one payment to the credit counseling agency, and they distribute the funds to your creditors.
Not only does consistently making the minimum payment significantly increase the time it takes to get your balance to zero, but it can also negatively affect your credit. Your credit utilization ratio, or the amount of revolving credit you use compared to the amount you have available, is an important factor used to calculate your credit scores. For optimal credit scores, it's best to keep your ratio below 10%.
When you make minimum payments, it takes longer to chip away at the balance, even if you stop using your credit cards to make purchases, leaving your utilization rate higher for longer. Paying more than the minimum saves you money on interest and reduces your credit utilization ratio faster.
It's always best to pay your credit card balance in full each month if you can. Doing so will save you a bundle of interest, reduce your credit utilization, and help protect your financial health. If paying your balance in full is out of reach financially, paying at least the minimum can help you avoid late fees, penalty APRs, and late payment reporting.
If you're worried that your credit scores may be impacted because you can't keep up with your minimum payments, reach out to your card issuer right away to inquire about relief options that may be available.
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The minimum payment due is a small portion of the total outstanding bill, which is you need to pay to the bank even if you not able to pay the complete bill amount.
The minimum payment due is fixed at 5% of the entire outstanding balance, which is calculated on the date when the credit card statement is sent to the cardholders.
Paying the minimum amount due on time shows that the cardholder needs to pay only the interest amount when needed without any sort of additional charges. Not only this but if you successfully pay the minimum amount due within the due date, your credit score will not be affected.
If you pay only the minimum amount due for a few months, you need to pay high interest on your outstanding amount. Moreover, you will not get any interest-free credit period. Apart from this, the bank will reduce your credit limit.
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