Credit Card Users Bills: Know Why Bills Should Be Paid On Time

Minimum Due

In India, credit card usage is surging and becoming a common payment option. However, the minimum due can lead one into a debt spiral.

Interest-Free Period Loss

There is a 45-day interest-free window for cardholders, but even if only the minimum due is paid, interest will still be charged on the unpaid amount. 

New Purchases

Any new purchases also attract interest from the transaction date, nullifying the benefit.

Minimum Due Amount Calculation

1. 5 per cent of outstanding balance: If the total dues are Rs 50,000, the minimum payment could be Rs 2,500.

2. Interest Charges

If there are any balances from previous cycles, they can incur interest, which is added to the minimum amount due.

3. EMI Components

Equated monthly installments are included in the charges if large purchases are divided into EMIs. 

4. Overdue Amounts

If any past amount is pending, that also gets added to the current minimum due.

Risk of Minimum Due Payment

There are high interest rates on credit cards if the payments are due.

Credit Score Impact

If one only pays the minimum, it can lead to lowering the credit score, making loans for the future more expensive or more complicated to obtain. 

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