If you are paying your credit card bill for the first time then you might be happy to see the new term “Minimum Amount Due” which is very little compared to the actually due credit card bill. Many people actually don’t know the actual concept of Minimum Amount Due and felt happy to pay a less amount.

What is Minimum Amount Due?

The Minimum Amount Due is a special term introduced by the banks only to provide credit card customers a temporary relaxation to pay the credit card bill. E.g. if you have shopped for Rs 30,000 for this month, then a credit card bill will be generated for amount of Rs 30,000. Now look at the credit card bill or statement carefully, you will find something called min amount due with the final bill amount.

Now as per Minimum Amount Due rules, bank may set some percentage e.g. 10% and provide you the option to pay only 10% of the total bill which would be Rs 3,000 and you can stay away from penalties. Now if you forget to pay a credit card bill within due date, you have to be ready to pay a heavy penalty. And that’s how banks make money from credit card business.

So, in such a case Minimum Amount Due looks very convenient and many people love to pay the same. Now if you don’t have money to pay the total amount then it is understandable to pay the min amount due to avoid penalties, but in case you have money and still you have paid the Minimum Amount Due only then you have done a mistake. Let’s explore the other side of Minimum Amount Due.

The real story behind minimum amount due in credit card bill

So, after paying the MOD of Rs 3000 you have still Rs 27,000 remaining balance to pay which will transfer to next months bill. Now in next month you have spend Rs 23,000 extra. So how the next bill generate?

It will be like [ Previous month balance Rs 27,000 + interest applied on Rs 27,000 + Rs 23,000 ] . And the new Minimum Amount Due will be 10% of this total amount and it will keep going. Which means you are actually paying more & more interest if you are paying only Minimum Amount Due amount every month.

So, make sure you are aware how this feature works best and when you should pay minimum amount due, rather than the complete credit card due amount. How do you prefer to pay your credit card bill? Share your experience if any by writing a simple comment below.


  1. That means banks are playing games with his customers.They are taking advantage of unconsciousness of customers, am I right?

    • I don’t think so. Banks are here to do business and that’s why they are issuing credit cards with terms & conditions. Now when someone is not able to pay the money even after 52 days of interest free period, banks are giving them an option to avoid the penalty with this min amount due. So, I think it is a good facility in that situation.

  2. Correction: in credit cards, Interest is always charged on the total Mount due of last month not on remaining amount due. So, in a credit card bill of Rs. 50000 even if one has paid Rs. 48000, then also interested will be charged on Rs. 50000 and not on Rs. 2000. And it will be for forever until you pay total amount due within due date.

  3. Hi Santanu,could you please tell me whether its good to invest in Fortune gain(Bajaj Allianz),because I want to invest a lumpsum amount in a tax free bond.please reply

    • Hi Sarita, I think bajaj allianz fortune gain is a ULIP plan, not a bond. ULIPs are good to invest if your investment term is more than 10 years or you can say long term. And you are happy to get a moderate return on investment E.g. 7% -8% in long run. Please read the ULIP charges carefully before investing.

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