Minimum Due on Your Credit Card:
Credit cards offer three main payment options each month. One of these is the Minimum Amount Due (MAD). It is a small part of the total bill that the cardholder must pay to avoid late fees and keep the credit score safe.
Banks mention this minimum amount in your monthly credit card statement. Along with MAD, they also show the Total Amount Due (TAD) and another option to pay any custom amount. Each option has its pros and cons.
MAD is a small percentage of your total bill. For example, Axis Bank may ask for 2% of your bill. ICICI Bank and American Express often ask for 5%. These percentages may vary by bank and users should read the terms of their card.
When you pay only MAD, the remaining bill moves to the next month. This helps if you don’t have enough money to pay the full amount. But banks charge high interest on the unpaid amount. Suppose your bill is ₹20,000 and you pay only ₹1,000 (5%). The rest ₹19,000 will carry over with monthly interest. Most banks charge 3 to 4% interest per month. That’s 36 to 48% yearly. This makes it one of the most expensive forms of debt.
1.Your credit card account stays regular.
2.You avoid late payment charges.
3.Your credit report does not show a delayed account.
4 Your credit score remains safe.
Drawbacks of paying only MAD:
1.You pay 3 to 4% monthly interest on the unpaid amount.
2.The full payment can take many months or even years.
3.You may fall into a debt trap.
4.High Credit Utilization Ratio (CUR) affects your credit score.
5.If the unpaid amount stays over 30% of your limit, your credit health drops.
6.You may face trouble getting new credit cards or loans later.
Paying only the minimum is a short-term relief but a long-term risk. Paying the full amount or as much as possible is always better.
Also Read: Faster UPI Transactions from June 16 – Here’s What You Should Know
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