A credit card is one of the vital financial tools to manage your expenses today.
You can make a payment today and make the online credit card paymentafter 40-50 days. What’s more, if you have a large transaction, you also get to convert it into EMIs over a tenor to pay easily.
After your credit card billing cycle gets over, the credit card statementgets generated, and you need to pay the bill.
However, when the bill arrives, it carries two types of amounts – one is the total amount due, and another one is the minimum amount due.
A minimum due amount is a certain portion of the total amount that you can pay and carry the balance forward. In this case, you won’t be considered a defaulter and not reported to the credit bureaus.
You can make the minimum amount due, sometimes, as the last resort when you don’t have enough money in a month to pay the total amount due.
However, the unpaid amount due on the credit card will keep coughing up interest untill you make the online credit card payment.
Let’s see some aspects about the minimum amount due and why it’s not at all good to keep paying it.
Advantages of paying the minimum amount due
- The minimum amount due is the least amount that you can pay after the generation of the credit card statement. This way, you can keep your credit card active and operative
- Paying the minimum amount due will make sure that you will need to pay only the interest when needed. There will not be any penalty or late payment charges
- Your instance of making the minimum amount due will not be reported by your credit card issuing bank to the credit bureaus if you do that by the due date
- Not making the online credit card payments by the due date will surely lead to hampering your Credit Score. To avoid this, all that you can do is paying at least the minimum amount due mentioned in your credit card statementon time
Disadvantages of making the minimum amount due
- The advantage of making the total amount due is that you get an interest free period for the duration of almost 2 months. You also get up to three week’s time to clear the outstanding amount after issuing of the credit card statement
- You will not be able to enjoy any interest free period if you keep paying only the minimum amount due and not the total amount due in full. Instead, a credit card user, in this case, will be charged interest from the date of purchase
- The interest amount will keep mounting untill your clear the dues. Hence, even if you have made the minimum amount due and avoided the payment of a penalty for delayed payment, you will not enjoy the pros of interest free period
Can you keep paying the minimum amount due?
Of course, you can continue to make the minimum amount due every month. The only major defect of doing it will be paying a higher interest rate. What’s more, there will also be no interest free period.
When it comes to the online credit card paymentor otherwise, the lesser you clear from your total amount due, the higher will be the interest.
You should also know that the credit card debts are highly expensive and hence, it is suggested to make the credit card payment in full. It may be fine if you make the minimum amount due once in a blue moon, but ensure that it’s not a habit.
If there is a financial emergency in your family and cash flow crisis in a particular month, paying only the minimum amount due could be an option. It will prevent your CIBIL Score from taking a hit and the late payment charges – but this should only be a short-term management.
Have you added your credit card money into a payment app and then transferred the amount in your bank account for use? It may also be a deterrent in clearing full dues. Hence, if you need money, you can apply for a loan against credit card like in the case of Bajaj Finserv RBL Bank SuperCard for an interest-free period of 90 days.
Also, if you think that it has become a habit to pay only the minimum amount due, you will need to cut on your expenses and revise your budget. This way, you would be able to make the total payment due gradually.
Many lenders such as Bajaj Finserv offers pre-approved offers on credit cards, EMI finance, home loans, personal loans and other financial products. It can simplify your loan procedures and make it less time-consuming.
You can share some of your basic personal inputs like your name and mobile number to check out your pre-approved loan deals today.
