Avoid Paying Minimum Dues on Your Credit Card – Kotak Bank
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Reasons to Avoid Paying Only Minimum Dues on Your Credit Card

Maintaining bank loans and credit cards are not much of a struggle nowadays, because most banks give you the option to repay on EMI or minimum due amount payment respectively. However, most customers fall prey to the option of paying minimum dues on their credit card resulting in increased use of the card, creating more loans.

What does Minimum Dues on Your Credit Card Mean?

Every credit card holder receives a credit card bill every month. The bill is divided in two parts - total dues and minimum dues. The minimum amount due is a small portion of the total bill that the customer needs to pay to avoid a penalty for late payment. For instance, if the total due amount is Rs.12,000 then the minimum dues would be Rs.1,200 (the percentage depends from bank to bank) which is usually always feasible for you to give. Thus, if you pay Rs.1,200 against your bill amount of Rs.12000, you will not be charged any penalty.

What are the Benefits of Paying only the Minimum Amount Due?

Paying the minimum amount due in credit card has many advantages. It -

  • Helps avoid late payment fee on credit card bills
  • Offers better money management solutions, especially when the budget is tight
  • Keeps credit accounts active even if there is outstanding balance


Credit card users often have a question “does paying minimum affect credit score” well the answer is no, it doesn’t because there is no unpaid bills from the issuer end to report.

As there are so many advantages of the minimum due, you may consider this option when it is not possible for you to pay the full bill amount.

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Don’t Pay Only Minimum Amount Due In Credit Card- Here’s Why!

  • Paying minimum dues is completely justified when facing a financial crunch. But making it a habit even when you have the capacity to pay back can backfire heavily. The reasons are:
  • It is Not Interest Free: After the first cycle of bill generation, your credit card loan will incur an interest based on the pending debt amount. In this respect, the higher the pending debt amount, the more would be the interest rate. With time, the interest rates will go up. This is because based on your repayment habit, the bank will assume your repayment chances are gleam and hence based on the risk generated the bank will charge you higher interest rate.
  • Credit Score will be affected: The more you utilize your credit, the lower your credit score With more debt adding up to your monthly credit card bill, the interest rates will have a direct reflection on your credit score. In case you need any loans in future the lower credit score would be a serious problem.
  • Debt trap: When you make payment of minimum dues for your credit card a regular habit, you end up in a debt trap. It is called a situation where the pending debt amount goes so high that it becomes difficult for you to repay it with time and hence you may need to go for another loan to settle the credit cards payments.

What will Happen if You Pay Only Your Minimum Amount Due for a Long Period of Time?

Paying the minimum on a credit card for a long time isn’t good for your financial health. Do you know why? Because it incurs high interest charges over the period the bill is outstanding. Plus no interest-free credit period can help you as it has a range of 45-60 days. Now you know what happens if you pay the minimum amount on a credit card for a longer time, use it smartly. 

Will Paying Only Minimum Due On Credit Card Bill Affect Credit Score?

A pattern of paying only the minimum amount due over a long time is never good, but it doesn’t impact your credit score. So if you are worried about “does paying minimum affect credit score negatively”, don’t be. Use the paying minimum due on credit card facility wisely as and when needed to ensure financial stability and easy credit score tracking.

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Credit card issuers always ensure educating the customers on all of the products and policies. The real money saving trick with respect to credit cards lies in your repayment strategy. Repay as much as you can from the beginning as credit cards come with several money saving options. But again, using minimum due facility smartly and repaying debts in time after that help you make the right move.

So what happens if you pay the minimum amount on a credit card is pretty simple as you pay a small portion of your bill. But you should know that it can quickly spiral out of your control if you keep on doing that. As mentioned above there are advantages of minimum due but there is also a high interest factor that needs to be considered. The additional fees associated with your carry on balance can make outstanding pay-out difficult. Be responsible with your spending habits and avoid falling into debt in the future.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.