What Is Minimum Amount Due In Credit Card?

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What is the Minimum Amount Due on a Credit Card

The minimum amount due. This is the minimum amount on your credit card bill you must pay within the payment due date to enjoy credit card benefits and keep your card active. Generally, the minimum amount due on a credit card is an option you can use if you find it challenging to repay the entire bill. 


Keep in mind that failure to clear your outstanding dues on time can lead to severe penalties, deactivation of the card, and harm to your credit score. However, the card issuing companies allow you to pay a small amount of your total outstanding amount, known as the minimum amount due, before the due date. This option will help you avoid penalties and keep your credit card active.

Benefits of Paying the Minimum Amount Due

At the end of every billing cycle, you will be presented with a credit card statement, which consists of the total amount due, and the minimum amount due. While paying just the minimum amount due has its pitfalls, it can also help mitigate the consequences of not paying the total amount before the due date.


Additionally, while you may understand what is the minimum amount due in credit cards, you must also be aware of when it is recommended to pay just the minimum amount. There may be times when you have a cash crunch or unexpected expenses, and you may not be able to pay the total amount due. In such situations, you can pay the minimum amount due.


Here are the benefits of paying the minimum amount due mentioned in your credit card statement.


  • You can maintain a good credit score by paying the minimum amount due before the due date. Even if it isn’t the total amount due, you can show the lender that you are responsible with credit by making the minimum payment. This will also convince other lenders that you can be trusted to repay your debts on time.

  • You won’t have to worry about the late payment fees, and pay only the interest on the outstanding amount.

  • You can easily manage your monthly budget, especially when you’re short on funds, by paying the minimum due on your credit card. You can use the additional funds to meet other financial obligations, while avoiding late payment fees and other penalties.

  • You can also keep the credit card active by paying the minimum amount due, and continue to enjoy its benefits.

How is the Minimum Due in a Credit Card Calculated

Usually, the minimum amount due on a credit card is around five percent of the total outstanding amount of the current month. However, if you have any credit card EMI, the minimum due amount usually includes that as well. As a result, the overall minimum due amount may be higher in some instances. Here’s an example to help you understand how banks calculate the minimum due amount.


Let us assume that the issuer generates the credit card statement every month on the 18th, and the due date falls on the 6th of the following month.


Now, imagine that the finance charges are 4% per month. No interest is charged if transactions are made on the 19th and 28th of February. 


On 18th March, the first statement gets generated. If the transaction is ₹2,000, the due would be ₹100 (5% of ₹2,000). ₹100 is the minimum amount due.


Before the 18th of April, if you make the minimum payment, the rest of the amount will incur the interest, that is, ₹1,900 (₹2,000 - ₹100).


Any transaction made in this month before 18th gets added to the outstanding amount. Even if you pay the minimum amount due, the outstanding amount will continue to incur interests. This will be charged as per the finance charges percentage.


  • Interest on previous month outstanding amount = ₹76 (₹1,900 x 4%)

  • Interest on the current month outstanding amount = ₹40 (₹1,000 x 4%)

  • Total Outstanding as on April 18, 2022 = ₹3,016 (₹1,900 + ₹1,000 + ₹76 + ₹40)

FAQs on Minimum Amount Due on a Credit Card

  • ✔️What does the ‘minimum amount due’ mean on my credit card statement?

    The minimum amount due refers to the minimum amount from the total credit card bill you must pay before the payment due date. It is a small percentage, usually 5%, of the total amount spent.


  • ✔️What are the consequences of paying just the minimum amount due on my credit card?

    You avoid the late payment fine by paying only the minimum amount; however, the interest charges continue to accrue. Also, the outstanding dues from the previous months would get added to the next month’s credit card bill.


  • ✔️What happens if I fail to pay the credit card bill before the due date?

    A late payment fee will be levied initially when you don't pay your credit card bill before the due date. Also, you would lose out on the interest-free period on the credit card, and your total outstanding dues would start to accrue interest. Any new transactions you make will also start to accrue interest. And finally, your credit score and your credit history will be deeply impacted as well.


  • ✔️Does the minimum amount due affect credit score?

    When you are paying the minimum amount due on a credit card, it will not affect your credit score.


  • ✔️Will I be charged interest if I pay the minimum credit card amount due?

     You will not receive any interest-free credit card period if you have paid the minimum payment. Besides, companies shall charge the interest amount from the date of your purchase. Moreover, the interest amount shall accumulate until you pay the dues.


  • ✔️How is the minimum payment due amount calculated?

    Typically, the minimum amount due on a credit card is around 5% of the total outstanding amount of the current month


  • ✔️Should you only pay the minimum amount due?

    If you are short on funds, it is acceptable to pay the minimum amount due on the credit card. However, to avoid any debt situation, in the long run, it is advisable to pay the full outstanding amount.


  • ✔️How can I determine the minimum amount due and the due date to make the payment?

    You can check the billing statement issued by the bank each month to determine the minimum amount that is due on the credit card, and the due date to make the payment.


  • ✔️Why is only paying back the credit card minimum due limit considered risky?

    Paying back the minimum amount is considered risky because of a number of reasons. Firstly, when you only manage to pay the minimum amount due on a credit card, each time the remaining balance gets carried forward to the next month adding to your debt. 


    Another reason is that the balance amount of the previous month gets added to the minimum amount of the current month. And finally, the credit score as well as the credit limit take a hit if you only consider paying the minimum amount due on the credit card.