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What is the Minimum Amount due on a Credit Card? Is it Useful?

What is the Minimum Amount due on a Credit Card? Is it Useful?
What is the Minimum Amount due on a Credit Card? Is it Useful?


In India, credit cards have transformed how people see debt. They serve as emergency ATMs for many people, dispensing plastic money when needed. While using the card, everything is OK, but many cardholders need to pay closer attention when it comes to paying back the amount that has been used. They either make hurried payments or pay only the minimal amount required, deferring the balance to other months. Both are acceptable things to do, but one should be aware of the effects of such actions.

The amount that a cardholder needs to pay prior to or on the payment due date is known as the minimum amount due (MAD) on the credit card. Typically, the minimum payment is equal to 5% of the total amount still owing. Any EMI payment or monthly installment conversions you may have chosen are also factored into the minimum credit card payment required amount.


Where does the Problem start? 

Beginning with paying with a credit card on the due date. The majority of us are prone to paying at the eleventh hour. When it comes to credit card payments, it might not be a good idea. Credit card bill payments through a few channels don’t always be credited right away, unlike other utility bill payments. Depending on the method of payment, banks normally need two to three days to process the payment. As a result, if you pay by the deadline, a late payment fee will be assessed. Even if you may believe that the money has been made on time, the processing time for credit card payments causes a delay. The date the payment is received, not the day you made the payment, is taken into account by the receiving bank. Therefore, be sure to pay your credit card account two to three days before the due date to prevent late payment costs.

In conclusion, if you frequently find yourself able to pay only the Minimum Due amount, you will need to reduce your spending and review your budget. You might consider personal loans or balance transfer options if the credit card interest has grown too much to handle.


Why does it happen?

Getting to the payment of the minimum amount due (MAD). There are legitimate situations where we are unable to pay the whole amount of the charge. We are left with no choice except to make the bare minimum payment in such cases. However, if you pay the MAD alone and proceed without understanding what will actually happen, you must be aware of the repercussions.

The credit card company will start charging interest on the balance you owe after you have made the minimum payment due. In addition, interest is charged on all subsequent purchases made using the card until the balance is paid in full. Due to the increased interest rates and associated taxes, this will result in an increase in your credit card payment.

Therefore, make sure you pay the bill in full and on the due date to prevent charging a late fee to your credit card.


Can We Pay the Minimum Amount Due Monthly?

Yes, however, there won’t be an interest-free time and you’ll have to pay large interest fees. Just keep in mind that interest will accrue the less you pay toward the debt. You must constantly make full credit card payments because credit card debts are quite expensive. You have the option of paying the Minimum amount owing when a monetary emergency or cash flow difficulty arises in a particular month. By paying the Minimum Amount Due, you can avoid negative effects on your credit score and late payment fees, but this agreement can only last for a limited time.


Can the Minimum Amount Due at Times be a Saving Grace?

Sometimes it just so happens that we spend a lot on impulse during the month, and by the time we get our credit card bill, our cash flow is already tight. In such circumstances, we would not always be able to pay the entire balance due. Any sum that is not paid in full by the end of the month also accrues hefty interest. The “Minimum Amount Due,” infamously known as MAD, can save us during these trying times. If you are unable to make full payments, you can pay the minimum payment, which is a tiny portion of the total amount owed.

Written by Aman Bindlish

I’m a passionate guitar player who loves jamming to metal and writing all sorts of things that come to my mind ranging from poems and short stories to random thoughts at 3 in the morning.

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