Two numbers on a credit card statement often confuse new cardholders: the minimum amount due and the total amount due. They are not the same.
Total Amount Due
The total amount due reflects the amount payable for the statement cycle according to the issuer’s statement.
Minimum Amount Due
The minimum amount due is the minimum payment required under the card’s terms. Paying only this amount can leave part of the balance outstanding.
Why Paying Only Minimum Can Be Expensive
If you carry a balance, finance charges can apply according to the card’s terms. New purchases may also lose the benefit of an interest-free period depending on the outstanding balance and issuer rules.
Example
If your statement shows ₹20,000 as the total amount due and ₹1,000 as the minimum, paying ₹1,000 does not mean the remaining ₹19,000 disappears. It remains subject to the applicable terms and charges.
Best Habit
Use a credit card like a payment tool rather than an extension of your income. Spend within your budget and aim to clear the statement balance whenever possible.
FAQ
Will paying the minimum keep my card active?
It may satisfy the minimum-payment requirement, subject to the issuer’s terms, but it does not eliminate the outstanding balance.
Can minimum payments increase the cost of a purchase?
Yes. Carrying balances can result in finance charges.
Disclaimer: Exact calculations and charges vary by issuer and card.