What does paying only the credit card minimum due really cost?

Paying only the minimum keeps the card in good standing but leaves the rest of the balance charging interest. At an example 3.5% a month, ₹1,00,000 costs ₹3,500 of interest in the first month alone. Paying a fixed ₹5,000 a month clears it in 35 months; ₹3,600 a month takes 105 months.

What the minimum due is

The minimum amount due is the smallest payment that keeps the account from being reported late. It is often around 5% of the balance, with any EMIs, fees and charges added in full; the exact rule is printed on your statement.

Paying it avoids a late fee and a late mark with the credit bureaus. It does not stop interest: everything left unpaid carries the card’s interest from the date of each purchase, and on most cards new purchases also stop getting an interest-free period while a balance is carried.

Interest this month = balance carried × monthly rate

₹1,00,000 at an example 3.5% a month, worked

Card rates are usually quoted per month. At an example 3.5% a month, which is 42% a year, ₹1,00,000 carried for a month adds ₹3,500 of interest. A payment only slightly above that barely touches the balance.

Paying a fixed ₹5,000 every month, about what a 5% minimum would be in the first month, clears ₹1,00,000 in 35 months, with close to ₹75,000 paid in interest. ₹10,000 a month clears it in 13 months. ₹3,600 a month, just ₹100 above the first month’s interest, takes 105 months, close to nine years.

These figures leave out the 18% GST charged on card interest, which adds to every one of them, and any late or over-limit fees. The rate is an example; your card’s own rate is on the statement.

Why a falling minimum takes even longer

A minimum worked out as a share of the balance falls as the balance falls. ₹5,000 in the first month becomes less each month after, so paying only the minimum takes longer than any fixed payment in the table above. The payment that stays the same is the one that finishes.

Comparing it with other ways to carry the balance

Converting a card balance to EMIs, or a personal loan, usually charges a much lower rate than revolving credit, with a processing fee and GST on the interest. Setting the total cost of each against the other, over the same months, is what compares them. The EMI calculator below gives the interest for any amount, rate and term you enter.