Minimum Amount Due

Purpose of amount

Minimum amount due is the figure that has to be paid to the bank for the purpose of ensuring that you do not fall under the defaulter category with respect to the card payment. It serves as an indication to the bank that though you might not be able to pay the full amount presently, you intend to pay it when possible.

Mode of calculation

The minimum amount due is usually a certain percentage of the total amount that you have to pay. This is around 5%-10%, and it can vary across cards.

Implication of paying

If you pay the minimum amount due then you automatically slip into the interest rate cycle, and the interest will start accumulating on the remaining outstanding amount that is yet to be paid.

Missed payment

If you miss the payment altogether, not managing to pay even the minimum amount, then there will be a non-payment charge that will be levied along with the interest. This means there is a double hit on this account.

Mistaken identity

In many cases, the minimum amount due is the figure printed on the tear-off portion of the credit card statement. If you mistake this figure as the total payment to be repaid then unknowingly you might slip into the interest rate trap.