Sometimes, individuals make more purchases due to the convenience of having credit cards. But, eventually, they end up getting an unmanageable credit card bill that is difficult to pay. Banks or other institutions offer a 'minimum payment due option', allowing customers to pay a minimum of the bill instead of paying all at once. If you have an HDFC credit card, paying the minimum amount due in credit card HDFC will be an option.
'Minimum Payment Due' is the minimum amount required to settle a credit card balance, even if paying the entire amount is not desirable. The credit card minimum amount due is typically 5% of the total outstanding amount.
The amount required on your credit card to meet the minimum payment includes any MI payment conversions you selected. Your bank may add any unpaid balance from the prior cycle or amounts exceeding your credit limit to the minimum payment due.
Paying the minimum due amount will offer the following benefits.
Paying off your credit card balance in full each month can help improve your credit score and help you establish a good payment history. Here are some of the aspects which denote that paying the minimum amount due must be avoided.
It is essential to remember that the less of the outstanding balance you pay, the more interest you accumulate over time. Sure, there can be times when you don’t have enough finances to pay the entire balance. Yet, the minimum amount due is only for emergencies. Insufficient payments may lead to dire consequences down the road.
If the credit card debt is too hard to tackle, you can take out a personal loan or opt for a balance transfer. With the Fi Credit Card, you can enjoy loans with additional rewards, discounts, and benefits on your purchases and 5% cashback on all your credit card spending.
If you make only the minimum payments on your credit cards over an extended period, it will increase your credit utilization ratio, which is detrimental to your credit score. Also, more than 30% credit utilization ratio can harm your credit score.
If you only make the minimum payment on your credit card bill, you will still accumulate interest on the remaining balance. However, meeting the minimum monthly payment will prevent you from incurring late payment fees and keep your credit card account open and your credit score intact.