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Credit Card Minimum Due: How It Works

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Created on
May 4, 2023


What’s Inside

If you own a credit card, you might know the payments due at the end of every month. Calculative spending enables you to use your salary and pay the total amount due on a credit card at the end of the month. But what if you spend and cannot clear your dues?

Here’s where the concept of credit card minimum due enters the field. In case of a financial crunch before the due date of your card payments, you can pay this amount to avoid late fees and make up for the outstanding amount during the next cycle.

But how does the minimum due work? Why do banks employ this model?

Minimum Due Amount:The Calculation

What is the minimum due on a credit card? It is a fraction or a small percentage of the total amount you owe. You must pay your minimum due on or before the next due date to avoid incurring late charges and adding to your woes.

Most credit card providers cap the minimum due amount at approximately 5% of the total pending balance at the time of the issuance of the credit card statement. However, a credit card's minimum due may include other charges, like EMI interest amounts or unsettled minimum dues from the previous months.

It provides an easier way to relieve you from financial burden, especially during additional credit card expenditure or when your salary is affected. Plus, the benefits of clearing the minimum due amount are plenty.

Why You Should Pay the Minimum Due Amount

It might be natural to ask - what is the last bill due on a credit card, and why does it matter so much? Here are some ways in which timely payment of the minimum due helps you:

  • It prevents your credit score from deteriorating too much. You can compensate the following month by clearing all your dues.
  • You only incur the interest from the credit card and save yourself from the late charges.
  • Managing the minimum due payments in time also ensures that you do not fall under the radar of credit bureaus and impact your credibility as a borrower in the market.

Plus, the credit card provider will also be assured of your reliability and be more willing to offer your credit requirements in the future if the need ever arises.

Summing Up

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Frequently Asked Questions

What is the minimum due on a credit card, and why is it important?

The minimum due is a small fraction of the total outstanding amount to be paid on your credit card. It is vital as paying the minimum due helps you avoid late fees and does not adversely affect your credit score.

How is the minimum due calculated, and what factors affect it?

The minimum due amount is 5% of the total outstanding amount. It largely depends on your interest rate and monthly balance.

What happens if I don't pay the minimum due on a credit card?

Not only will your credit provider levy a late charge on top of the interest accrued, but you will also notice a drastic reduction in your credit score if you do not pay the minimum due on or before the due date.

How does paying only the minimum due affect my credit score?

After paying the minimum due, your credit score will only take a short tumble. However, not paying any amount will cause it to fall even further, making restoring it to the original number difficult.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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