Reality of Minimum Amount Due | How to Pay Credit Card Bill | What is Minimum Amount Due

What is Minimum Amount Due in Credit Card?
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The minimum amount due is the minimum amount that you are required to pay against your credit card bill by the due date. It’s 5% of your total amount due.
However, paying only the minimum payment can lead to a cycle of revolving debt. Revolving debt occurs when a credit card holder continues to make only the minimum payment each month, rather than paying the bill in full. Many people are not aware that interest is charged on the remaining balance every month, as well as on any additional spending, even though their credit score remains unaffected and no late payment fee is charged. By repeatedly paying the minimum payment and incurring interest charges, individuals become trapped in revolving debt.
3 reasons why you should not pay just your minimum amount due:
1. You pay a lot of interest - Keeping an outstanding balance on your credit card for a long time can mean piling up interest. And if you keep paying just the minimum amount, you barely reduce your outstanding balance.
2. Your credit score will take a hit over time
Continuously paying only the minimum amount and allowing interest charges to accumulate can result in a situation where a significant portion of your credit limit is utilised, which has a negative impact on your credit score. Additionally, you may find yourself in a long-term payment cycle.
3. You will pay for a very long time
Without monitoring your spending and income ratio, the ongoing minimum payments can eventually lead to credit card debt. In such a scenario, you may have to resort to taking out a personal loan to pay off your outstanding balance. However, if your credit score is low, you may not be eligible for a loan, or you may receive unfavourable terms.