Key Takeaway
Paying only the minimum due (5% of balance) on credit cards triggers the revolving credit trap. Interest accrues on the entire outstanding amount from the date of each transaction, not just the unpaid portion.
By paying only the minimum amount due (starting at ₹5,000), you end up paying an extra ₹1,86,754 in pure interest over a span of 171 months.
Repayment Schedule (First 12 Months)
| Month | Payment Made | Interest Charged | Remaining Debt |
|---|---|---|---|
| Month 1 | ₹5,000 | ₹3,333 | ₹98,333 |
| Month 2 | ₹4,917 | ₹3,278 | ₹96,694 |
| Month 3 | ₹4,835 | ₹3,223 | ₹95,083 |
| Month 4 | ₹4,754 | ₹3,169 | ₹93,498 |
| Month 5 | ₹4,675 | ₹3,117 | ₹91,940 |
| Month 6 | ₹4,597 | ₹3,065 | ₹90,408 |
| Month 7 | ₹4,520 | ₹3,014 | ₹88,901 |
| Month 8 | ₹4,445 | ₹2,963 | ₹87,419 |
| Month 9 | ₹4,371 | ₹2,914 | ₹85,962 |
| Month 10 | ₹4,298 | ₹2,865 | ₹84,529 |
| Month 11 | ₹4,226 | ₹2,818 | ₹83,121 |
| Month 12 | ₹4,156 | ₹2,771 | ₹81,735 |
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Frequently Asked Questions
What is the Minimum Amount Due (MAD) on a credit card?
The minimum due is typically 5% of the total outstanding card balance. It is the minimum payment required to avoid late fees, but interest continues to accrue on the unpaid balance.
Why is paying only the minimum payment bad?
Paying only the minimum amount due traps you in a cycle of debt because card interest rates are extremely high (36-45% p.a.). The unpaid principal accumulates interest, taking decades to clear.
Does paying the minimum due affect my CIBIL score?
It keeps your account status active and avoids late payment remarks, but high outstanding balances keep your credit utilization ratio high, which negatively impacts your CIBIL score.
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