The Impact of Paying Only the Minimum Amount Due on Your Credit Card

Credit Cards have become a popular financial tool for individuals to fulfil their daily expenses or for large purchases. However, sometimes, costs can exceed an individual’s earnings, leading to a situation where the entire Credit Card bill cannot be repaid in full. It is where the concept of the minimum amount due on a Credit Card comes in. 

This article will discuss the minimum amount due and how it is calculated. It will also discuss the consequences of paying only the minimum amount due. So let’s start with understanding what the minimum payment due is.

What is the Minimum Payment Due?

The minimum amount due on Credit Card refers to the small amount calculated out of the total outstanding Credit Card bill amount that an individual must mandatorily pay to the bank before the due date.

This partial amount must be paid as the ‘minimum amount due.’ It is important to note that paying only the minimum amount due is not recommended as it can lead to accumulating interest charges on the outstanding balance.

How is the Minimum Amount Due Calculated?

The minimum amount due is fixed, with 5% of the total outstanding balance calculated when the Credit Card statement is issued. However, specific scenarios exist where charges might be added to the user’s minimum amount due. 

For instance, if users convert their purchases to EMIs, the interest amount will be added to the minimum amount due. Additionally, if there is any unpaid minimum balance from the previous month’s billing cycle, it will also be added to the minimum amount due.

Why Shouldn’t You Pay Only the Minimum Amount Due?

While paying the minimum amount due is better, it should only happen when there is no possibility of paying the entire outstanding balance. Paying the complete outstanding balance is one of the best practices for Credit Card holders to avoid accumulating interest charges on the due credit. Here’s why:

  • It allows individuals to take advantage of an interest-free credit period for up to two months. On top of this, individuals can also get an additional time of up to 3 weeks from the date of issue of their Credit Card statement to clear their outstanding balances.
  • If individuals pay only their minimum dues, they will have to pay additional interest rates on a Credit Card on the outstanding balance from the date of purchase. It is also important to note that if individuals settle only their minimum dues for a few months consecutively, the interest on the outstanding balance will accumulate over time, leading to substantial debt.

What Happens if You Pay Only the Minimum Amount Due for a Long Period?

While paying only the minimum amount due for an extended period is possible, it is not advised. Doing so can lead to the following consequences:

  • High-interest charges on the outstanding amount – Paying only the minimum amount due can accumulate interest charges on the unpaid balance, leading to significant debt.
  • No interest-free credit period – Paying only the minimum amount due does not provide individuals with an interest-free credit period, which can further increase the interest charges on the outstanding balance.
  • Credit limit reduction – Individuals who pay only the minimum amount due for an extended period may see a reduction in their credit limit to the amount they have not repaid.

Dos and Don’ts for Credit Card Repayment

Individuals should follow certain dos and don’ts to maintain a healthy credit history and repayment status. These are as follows:


  • Use Credit Cards effectively to earn reward points.
  • Keep Credit Cards safe.
  • Pay your card bills on time.
  • Use Credit Cards for emergency expenses.


  • Overspend as Credit Cards offer borrowed money.
  • Ignore the Credit Card offers such as rewards and discounts.
  • Do not lose your Credit Card.

Also Read: Avoid Paying Minimum Dues on Your Credit Card


Paying more than the minimum payment on your Credit Card can result in significant interest savings and improve your credit rating. To further improve your financial standing, consider paying off your balance entirely, which will prevent any interest charges.

If you’re concerned that you won’t be able to meet the minimum payments and may harm your credit score, don’t hesitate to contact your Credit Card issuer to explore available relief options.

Donald Merkley

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