News India Live, Digital Desk: Credit card companies give two options in your bill ‘Total Due’ and ‘Minimum Due’. Many people, due to lack of cash or lack of information, remain relaxed by paying only the minimum due (usually 5% of the total bill). But do you know that it is like ‘poison’ for your financial health?

1. What is ‘Minimum Amount Due’ (MAD)?

Minimum amount due is the minimum amount which you can pay only Late Fee Can avoid. Paying it does not mean that interest will not be charged on your remaining bills.

2. The calculation of huge interest

Credit card interest is the costliest in India (annual 36% to 48% till).

End of interest free period: As soon as you pay only the minimum due, the ‘interest free’ period of 45-50 days on your card ends.

Instant interest on new expenses: After this, whatever new transaction you do with the card, heavy interest will start being charged on it from the very first day.

3. Understand with an example (A Simple Example)

Let’s say your bill ₹50,000 and you just ₹2,500 (Minimum Due) paid.

outstanding amount: ₹47,500

Interest: Now about 3-4% monthly interest will be charged on this ₹ 47,500 per day.

outcome: Next month your bill will again cross ₹50,000 with the previous month’s interest and new expenses. If you keep paying only the minimum due, it will take you Rs. 50,000 to repay this loan. 10 to 15 years May take place!

4. Bad effect on credit score

Consistently paying minimum dues signals to banks that you ‘Credit Hungry’ And are under debt pressure. This may damage your credit score (CIBIL), which will make it difficult to get a home loan or car loan in the future.

How to Avoid This Trap:

Always pay ‘Total Amount Due’: Try to pay the bill in full on time.

Choose EMI option: If you are not able to pay the entire amount, convert the outstanding amount into a low interest EMI. This is much cheaper than paying minimum due.

Control wasteful expenditure: Use credit cards only as per your repayment capacity.