Paying the minimum due amount on your credit card bill, is one of the biggest blunder you can ever make. An occasional payment is acceptable only if you are short of funds, but forming this into a habit, can be financially detrimental.
Your credit card bill comes with the total dues and the minimum dues. Total due is the entire amount you owe on your credit card which is the total amount you have utilised on your credit card for that month. Minimum due, is the amount you have to pay to steer clear of any late payment dues. It is usually dependent on the bank but they charge a small part of the total due. For e.g. if your total credit card dues for the month of November is Rs.15,000. Your minimum due would be around Rs.1500 depending on the banks policy.
Making a habit of paying minimum dues on your credit card can be damaging and disastrous on your financial health. Credit card debt is interest free only for one billing cycle, after which the interest is charged. At the end of the cycle, the unpaid balance amount is charged an interest rate, till cleared. The credit card interest rate is usually high between 15- 30% per annum, which adds up to a much bigger amount than you thought you would.
When you only pay minimum dues, the burden of your bills will be lighter for a short while, and you will feel relieved. However, what you need to be aware that the interest will add up to the unsettled amount due. If you make a habit of only paying minimum dues, here is what you can expect-
Though these sound quite scary, it is completely escapable. Making full payments in time can avert any surmounting debts and thereby getting caught in any debt trap. Be in control of your financial health, apply for the best credit cards and use the credit card responsibly. Credit cards are a boon, don’t turn it out to be a curse. It helps you make huge savings with various offers, discounts, complimentary benefits, and many other rewarding features.