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What Is the Minimum Amount Due on Credit Cards?

Wondering what is the minimum amount due on a credit card? The answer is simple. As the phrase suggests, it is the minimum amount that you have to pay towards your credit card bill. 


You can pay this amount on or before the due date. Generally, you don’t need to calculate this amount as the issuer will mention it on your credit card bill. 


However, it is usually 5% of the total outstanding amount, including any balance from the previous month. The benefit of paying the minimum amount is that you can avoid any late payment charges or penalties.

Benefits of Paying the Minimum Amount Due

At the end of every billing cycle, you will receive the credit card statement, consisting of the total and the minimum due amount. While paying just the minimum amount due has its pitfalls, you also mitigate the consequences of not paying the total amount before the due date.

Additionally, while you may understand the minimum due amount, 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 some of the benefits you get when you just pay the minimum amount due on a credit card.

  • You could maintain a better 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 by making the minimum payment.

    This will also convince other lenders of your creditworthiness.

  • 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 your card active and enjoy its benefits by paying the minimum amount due on your credit card.

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How is the Minimum Due on a Credit Card Calculated?

Usually, the minimum amount due on a credit card is around 5% of the total outstanding amount in the current billing cycle. 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 than the amount spent in some instances. Here’s an example to help you understand how banks calculate the minimum due amount.


Assume that the credit card issuer releases the billing statement on the 18th of every month. So, the final date to pay the due amount is 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 initiated for ₹5,000, the minimum due would be ₹250 (5% of ₹5,000).


If you make the minimum payment before the 18th of April, the outstanding amount will incur the interest, that is, ₹4,750 (₹5,000 - ₹250).


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

  • Interest on previous month outstanding amount = ₹190 (₹4,750 x 4%)

  • Interest on the current month outstanding amount = ₹120 (₹3,000 x 4%)

  • Total Outstanding as of April 18 = ₹8,060 (₹4,750 + ₹3,000 + ₹190 + ₹120)

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How to Increase Your Credit Card Limit?

Your credit card limit is assigned to you based on your financial standing, and the way you manage your existing credit. Naturally, paying only the minimum amount every month isn’t the best way to get a higher limit. 


Here are some smart ways to increase your credit card limit. 

  • Request your bank or the credit card issuing company to enhance your credit limit

  • Boost your credit score/ CIBIL score to up to 750 or above

  • Keep your credit utilisation ratio below 30%

  • Check for an annual hike with your issuer

  • Opt for a credit card with a higher credit limit

  • Reduce your existing credits and loans

  • Maintain proper discipline when paying credit card dues


While all these points can help in increasing your card limit, you need to apply for a credit card that best fits your monthly financial requirements. Hence, before increasing the card limit, ensure your monthly obligations are well within limits.

FAQs on Minimum Amount Due on a Credit Card

The minimum amount due refers to the mandatory 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.

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

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. This can affect your credit score and credit history.

Yes. When you are paying the minimum amount due on a credit card, your credit score could get affected.

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

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

If you are short on funds, it is acceptable to pay only 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.

You can check the credit card statement issued by the bank each month to determine the minimum amount due on a credit card. Check the due date on your statement to make the payment on time.

Paying back the minimum amount is considered risky because of a number of reasons. First, by paying only the minimum amount due on a credit card, the outstanding amount gets carried forward to the next month. 


This amount attracts interest, which adds to your debt. Secondly, if you continue to pay only the minimum amount due on a credit card, your total outstanding barely reduces. Thus, you end up paying significantly more for every month that you leave the balance unpaid. 


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 and the credit limit take a hit if you only consider paying the minimum amount due on the credit card.

Yes. You must pay the interest on the outstanding amount if you pay only the minimum due and not the total outstanding amount before the grace period.

The total due amount is the outstanding credit of the current billing cycle, along with the balance carried over from the previous bill. On the other hand, the minimum amount due on a credit card is the minimum payment needed to avoid a late payment penalty. 

The minimum amount due on a credit card is set at 5% of the total amount due. You can calculate the outstanding amount by subtracting that from the total due amount. 


So, if your total amount due is ₹10,000, then your minimum amount due will be ₹500, and the total amount due will be ₹9,500. 

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