Various questions arise when it comes to credit cards like the minimum amount due and how it affects the credit score.

Let’s understand the situation with an example

Minimum Amount Due in Credit Card
Source: Student Loan Hero

Rajat got his first credit card after getting a job and started using the credit card very carelessly because he thought that his job is secure and safe for him. Then he lost his job, but he still kept using the credit card by paying the minimum amount due.

After a while, the credit card started seeing big transactions which were exceeding the limit, so the bank blocked the card.

Now, he has a great job, but the requests for his home loans are getting rejected because his credit score is not so great in the CIBIL.

Source: Student Loan Hero

He is not the only person who faces this because many people go through this problem of getting trapped in the credit card debt. That’s why it is essential to understand the minimum amount due in the credit card and how not to spoil the credit score.

Credit card billing cycle:

Minimum Amount Due in Credit Card
Source: NerdWallet

It is a period where you are able to pay the dues of your credit card. If we assume that your billing cycle is from 5th April to 4th May and the due date to make the payment is around 25th May, so in this situation, the bill will always generate on the 4th of every month.

The monthly bill of credit cards will have all the transactions that are done during the same month.

If the amount is around Rs 10,000, then the person has to pay on the due date, and if the amount is around Rs 15,000, then there is another option known as the minimum amount due.

What is the minimum amount due in a credit card?

Source: Us News Money

The minimum amount due in a card is decided by the bank from where the credit card is issued. If you pay the minimum amount due in the card, you will not be treated as the defaulter, and you can also use the card in the future.

What will happen if only the minimum amount due is paid?

Minimum Amount Due in Credit Card
Source: FundsTiger

If the cardholder only pays the minimum amount due then, the rest unpaid amount gets carried forward to the next month. Remember, when you start doing this, it starts becoming a debt trap for your credit card.

Can you make fresh purchases using a credit card?

Source: Groww

Yes, you can, but then you won’t get interest-free credit anymore. For the new purchases, the bank will start charging the cardholder interest from the date of purchase.

It will keep on happening till the time you do not clear the pending payment, which is due on the card.

Will this affect your CIBIL score?

Minimum Amount Due in Credit Card
Source: CIBIL

If you are using the revolving credit and do not pay the dues, it will affect your CIBIL score. It will also affect the score and cause problems in the credit score in the future.



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