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When Raj received his credit card statement, the total outstanding amount was ₹10,000. Just below it, the bank highlighted another figure in large green letters:
When Raj received his credit card statement, the total outstanding amount was ₹10,000. Just below it, the bank highlighted another figure in large green letters:
“Minimum Amount Due: ₹500”
Since he was short of cash that month, Raj paid only ₹500 and assumed the remaining ₹9,500 would simply carry forward to the next bill.
Three months later, he was shocked to discover that despite making regular minimum payments, his outstanding amount had crossed ₹12,000.
Raj had fallen into one of the most common credit card traps in India—the “Minimum Amount Due” illusion.
Many consumers believe that paying the minimum amount means they are avoiding interest. In reality, it only prevents the account from being marked as a payment default.
Interest starts accruing on the remaining balance.
New purchases may also attract interest.
Late fees can still apply if payments are delayed.
GST is charged on interest and penalties.
Raj’s Actual Calculation
₹10,000
₹500
₹9,500
Monthly interest (approx.)
3.5%
₹332.50
₹59.85
₹392.35
That means even after paying ₹500, Raj’s debt barely reduced because almost ₹400 was added back as interest and taxes.
Credit card companies often advertise interest as 3%–4% per month. Consumers may not realize that this translates into an annual rate of approximately 36%–48% or even more after compounding.
Approx. Annual Cost
8%–10%
9%–12%
12%–18%
36%–48%+
Another Hidden Charge: Interest-Free Period Gets Cancelled
Suppose Raj buys groceries worth ₹2,000 after paying only the minimum amount.
He expects the usual 45-day interest-free period. However, because the previous balance was not fully cleared, the bank may start charging interest on the new purchase from the date of the transaction itself.
This is one of the least understood aspects of credit card billing.
Clearly disclose interest rates.
Inform customers about charges and penalties.
Provide billing statements with transparent calculations.
Offer grievance redressal mechanisms for disputes.
If a bank applies charges that were not properly disclosed, consumers can raise a formal complaint with the bank’s grievance officer and escalate the matter if necessary.
Priya faced a similar situation with a ₹25,000 credit card bill. Instead of paying only the minimum amount, she called the bank and asked for a temporary EMI conversion.
The bank converted the balance into a 12-month EMI at a much lower interest rate than the revolving credit card rate.
Her monthly payment became predictable.
Interest reduced significantly.
She avoided additional late fees and compounding charges.
Warning Signs You’re Entering the Credit Card Trap
You regularly pay only the minimum amount due.
Your outstanding balance keeps increasing despite payments.
You use one credit card to pay another.
You ignore interest and GST entries in the statement.
You have multiple cards with revolving balances.
Pay the full amount whenever possible.
If full payment is difficult, consider EMI conversion.
Read the interest section of the statement carefully.
Check whether new purchases are attracting immediate interest.
Maintain a record of all charges and communications with the bank.
Yes. If you believe:
Interest has been calculated incorrectly,
Late fees were applied despite timely payment,
Charges were not properly disclosed,
Or unauthorized transactions appeared on the card,
you can file a written complaint with the bank and escalate it through the official grievance mechanism.
“The ‘Minimum Amount Due’ is not a discount or a relief scheme. It is merely the minimum payment required to keep the account active. Consumers should understand that revolving a credit card balance can become one of the most expensive forms of borrowing.”
Total Outstanding: ₹10,000
Minimum Due: ₹500
don’t assume that paying ₹500 will save you money.
In many cases, it can become the first step toward a long-term debt cycle.
A few minutes spent understanding your credit card statement can save thousands of rupees in unnecessary interest and charges.