What is Minimum Amount Due in Credit Card in India

what is minimum amount due in credit card

Introduction to What is Minimum Amount Due in Credit Card in India – In the dynamic landscape of personal finance, credit cards have become indispensable tools for transactions, offering convenience and building credit history. Amidst the plethora of features and terms, the Minimum Amount Due (MAD) stands out as a critical element that requires comprehensive understanding. This article delves into the nuances of MAD on Indian credit cards, elucidating its definition, calculation methods, potential consequences, and strategies for effective management.

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what is minimum amount due in credit card
DefinitionSmallest monthly payment to maintain credit standing.
Calculation MethodPercentage of Statement Balance (5% to 10%).
FormulaMAD=Statement Balance×Percentage Rate
Consequences– High-interest accumulation (15% to 40%).
– Extended debt repayment.
Negative impact on credit score.
– Increased default risk.
Management Strategies – Prioritize full payment.
– Pay more than MAD when full payment isn’t feasible.
– Track income and expenses.
– Set up automatic payments.
– Utilize mobile apps for payments.
– Explore balance transfer options.
– Seek professional advice if needed.
Example Illustration₹10,000 purchase on 1st March.
₹15,000 statement on 31st March.
₹750 MAD was paid on 6th April.
₹3,000 new purchase on 10th April.
Interest on ₹11,250 from 10th April.
ConclusionCrucial for financial stability. Relying solely on MAD can lead to a debt cycle. Proactive strategies and full payments are key to financial well-being.

What is the Minimum Amount Due in India?

The Minimum Amount Due on a credit card in India is the smallest payment mandated each month to sustain a positive standing with the credit card issuer. This amount typically ranges from 5% to 10% of the outstanding balance, contingent on the user’s agreement with the credit card provider.

Calculation of Minimum Amount Due in India:

The calculation of the Minimum Amount Due follows a straightforward process based on two key factors: the Statement Balance and the predetermined Percentage Rate set by the credit card issuer. The formula is expressed as:

Minimum Amount Due=Statement Balance×Percentage RateMinimum Amount Due=Statement Balance×Percentage Rate

For instance, if the Statement Balance amounts to ₹10,000 and the Minimum Percentage Rate is 5%, the Minimum Amount Due would be ₹500.

Consequences of Paying Only the Minimum Amount Due in India:

While opting to pay only the Minimum Amount Due might seem convenient, it can lead to severe financial repercussions, especially given the high interest rates prevalent on Indian credit cards.

  1. High-Interest Accumulation: Indian credit cards often carry interest rates ranging from 15% to 40%. Paying only the Minimum Amount Due allows the remaining balance to accrue interest rapidly, resulting in a burgeoning debt burden.
  2. Extended Debt Repayment: Making only the Minimum Payments significantly prolongs the time required to pay off credit card debt. This extension amplifies the total interest paid over time, exacerbating the overall financial burden.
  3. Negative Impact on Credit Score: Consistent late payments and maintaining a high credit card balance adversely impact the credit score. A diminished credit score can limit one’s ability to secure loans, mortgages, and even employment opportunities in India.
  4. Increased Risk of Default: The inability to manage the escalating debt increases the risk of defaulting on credit card payments. This scenario triggers severe financial consequences, including legal actions, damage to credit scores, and challenges in accessing future financial services.

Strategies for Managing the Minimum Amount Due in India:

To navigate the complexities of credit card debt in India and mitigate the risks associated with paying only the Minimum Amount Due, consider adopting the following strategies:

  1. Prioritize Full Payment: Aim to pay the entire credit card balance in full each month. This not only eliminates interest charges but also safeguards your credit score.
  2. Pay More than the Minimum: Even if full payment is not feasible, strive to pay more than the Minimum Amount Due. This practice significantly reduces debt and minimizes interest charges over time.
  3. Track Expenses: Create a comprehensive budget to track income and expenses. This exercise provides a clear understanding of your financial situation, enabling effective allocation of funds for credit card payments.
  4. Set Up Automatic Payments: Automating payments for at least the Minimum Amount Due ensures timely payments, avoiding late fees, and protecting your credit score.
  5. Utilize Bill Payments Apps: Leverage the convenience of mobile apps or online banking facilities for seamless and timely credit card bill payments.
  6. Explore Balance Transfer Options: Consider transferring your credit card balance to a card with a lower interest rate. This move reduces the financial burden of interest charges, making debt repayment more manageable.
  7. Seek Professional Financial Advice: If grappling with credit card debt, consult with financial advisors or credit counselors. Their expertise can provide personalized guidance and support tailored to your specific financial situation.

Example Illustration:

To illustrate the impact of paying only the Minimum Amount Due, let’s consider a scenario:

Date of TransactionType of TransactionTransaction Amount (INR)Remarks
1st MarchPurchase₹10,000No interest charged
15th MarchPurchase₹5,000No interest charged
31st MarchStatement Generated₹15,000
6th AprilMinimum Amount Due Payment₹750 (5% of ₹15,000)
10th AprilNew Purchase₹3,000Interest starts accruing on ₹11,250 (₹15,000 – ₹750)

In this example, paying only the Minimum Amount Due triggers interest on the remaining balance, leading to a cycle of debt. The total Minimum Amount Due for the next billing cycle would be calculated based on the new outstanding balance.


In conclusion, comprehending the Minimum Amount Due on Indian credit cards is imperative for maintaining financial stability and safeguarding creditworthiness. While it offers a temporary solution, relying solely on the Minimum Amount Due can result in a cycle of debt and adversely impact one’s financial future. By adopting a proactive approach, implementing the suggested strategies, and prioritizing full payments whenever feasible, individuals can gain control over credit card debt and achieve financial peace of mind. Responsible credit card usage and financial awareness remain pivotal in achieving financial goals and securing a brighter future.

FAQs: What is the Minimum Amount Due on a Credit Card

What is the Minimum Amount Due on a Credit Card?

The Minimum Amount Due (MAD) is the smallest payment required each month to keep your credit card account in good standing. It is usually a percentage of the total outstanding balance and varies among credit card issuers.

What Happens if I Only Pay the Minimum Amount Due?

If you consistently pay only the minimum, you will accrue interest on the remaining balance, and it may take a considerable amount of time to pay off the debt. This can lead to financial challenges and impact your creditworthiness.

Can I Pay More Than the Minimum Amount Due?

Yes, and it is advisable to do so whenever possible. Paying more than the minimum helps reduce the outstanding balance faster, minimizing interest charges and accelerating the debt repayment process.

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