February 24, 2024

If you have an HDFC credit card, paying the minimum amount due on your HDFC credit card will be an option that will save you from getting an unmanageable credit card bill that is difficult to pay.

Customers can choose to pay a portion of their bill rather than the entire amount due by using the “minimum payment due option” provided by banks and other institutions. View the details!

What is Minimum Due in Credit Card

What is the Minimum Due in Credit Card?

The minimal amount a cardholder must pay by the deadline set by their credit card issuer to keep their account open and in good standing is known as the minimum due on the card.

The minimum payment amount is normally between 5% and 10% of the total amount owed, which is a small portion of the entire amount of outstanding credit card bills.

Using a predetermined formula that takes into account the current amount, any new charges, related to payments, and money spent on the credit card, the credit card issuer establishes the minimum payment.

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Calculating the Minimum Due in Credit Card

Check your monthly billing statement to determine the minimum amount owed on your credit card. The minimum due is determined as a percentage of the outstanding balance, as was previously specified.

On your credit card statement, the exact minimum amount owed for a certain credit cycle as well as the total amount due are indicated in bold.

The precise proportion may change based on the sort of credit card you own and the card issuer’s evolving policy.

In the event that your credit card has an outstanding balance of ₹20,000 and the minimum amount due is 5% of the entire outstanding amount, your minimum amount payable would be ₹20,000 x 0.05, or ₹1,000.

Importance of Paying the Minimum Amount

It’s crucial to make the minimum credit card payment in order to prevent harm to your credit card account and general financial well-being.

It’s crucial to pay the minimum amount owed for several reasons. These include:

Helps Avoid Late Payment Fees

Late payment fees may be assessed by the credit card issuer if the minimum payment is not paid by the due date.

These fees are an extra financial hardship that can be easily avoided by making on-time payments, and they can vary depending on the outstanding balance.

If you fail to make the minimum payment on time, your card issuer may charge you late fees. Depending on the amount owed, these costs can vary from a few hundred to several thousand rupees.

Preserves Credit Score

Your credit score is a key factor in determining your future creditworthiness and serves as a numerical indicator of your creditworthiness.

While making late payments might lower your credit score, paying the minimal amount due on your credit card on time contributes to maintaining a good credit history.

Your card issuer reports late or undelivered payments to credit bureaus each time you fail to pay your credit card account.

This has a negative effect on your credit score and makes it more difficult for you to receive credit lines or loans in the future.

Prevents High-Interest Charges

When you use a credit card and just make the minimum payment, the leftover balance is carried over to the following billing cycle.

Interest charges are applied to this balance, and if they are not effectively handled, they can quickly accrue and create a debt cycle. Therefore, it is advisable to pay off the entire amount owed as soon as you can.

You can keep yourself from paying exorbitant interest by making your payments on schedule.

By doing this, you also avoid falling further into a credit card debt trap and relieve yourself of the financial strain that would otherwise make it more difficult for you to pay off your debt.

Understanding the Credit Card Billing Cycle

It’s critical to comprehend the credit card payment cycle in order to determine the minimum amount owed.

The billing cycle normally lasts 30 days, beginning on the date of the previous statement and ending on the closure date of the current statement.

All of the Credit Card purchases made during this time are tracked, and at the conclusion of the cycle, a statement is produced.

The statement contains pertinent information such as the due date, minimum amount due, total outstanding balance, and new charges.

Credit card providers usually give you 15 to 20 days after creating your statement to settle your balance, make a partial payment, or, at the absolute least, pay off the minimum amount due on your credit card.

Tips to Avoid Late Payment Fees

The effect of late payments on your credit score might be detrimental. You can take the following actions to prevent late payment penalties and the repercussions that come with them:

Set Up Payment Reminders

You can use digital reminders, like text alerts or push notifications on your phone, to help you remember when your credit card is due. This will assist you in adhering to your payment plan.

Automate Your Payments

The majority of banks provide autopay options, which let you schedule automatic payments for your credit card bill’s minimum payment or entire outstanding balance.

You can make sure you never forget the deadline or worry about accruing late penalties by setting up an automated payment system.

Opt for the ECS Facility

To ensure that your credit card bills are paid automatically from your linked bank account on the due date, you should think about enrolling in the Electronic Clearing Service (ECS) provided by credit card issuers.

You will receive email and SMS alerts notifying you of the payment’s arrival.

Make Timely Payments a Priority

Your credit card bills need to be paid as much attention as any other necessary spending.

To ensure that you pay your bills on time, you should set aside money well in advance to meet the minimum amount owed or, if you can afford it, the entire outstanding sum.

Taking this action raises your credit score.

Monitor Spending Patterns

To make sure you don’t use your credit card beyond the allotted limit, you should keep a record of your purchases.

Additionally, you need to confirm that you have enough money in your bank account to settle any outstanding credit card debt.

You can better plan ahead for all of your financial obligations by keeping an eye on your spending habits.

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Summing it Up

You should be well-versed in all of the terms, lingo, and concepts that are specific to credit cards as a user.

Additionally, you must pay at least the minimum amount owed on your credit card in order to prevent the suspension of your card usage privileges.

Moreover, you should only think about paying minimum payments if you are having financial difficulties.

To avoid paying interest or other fees and charges related to credit card payments, it is preferable to pay off all of your outstanding debts.

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