Reward Maths and Choosing a Card
Minimum amount due on a credit card: what it covers, the RBI rule and what paying only the minimum costs
What the minimum amount due on an Indian credit card includes, the RBI rule against negative amortisation, and worked examples of how long paying only the minimum takes.
The minimum amount due (MAD) is the smallest payment that keeps your card account in good standing: it avoids a late payment charge and stops the account being reported past due. It does not stop interest, which runs on the entire unpaid balance — usually from each transaction date — and new purchases lose their interest-free period. Under the RBI's card directions the MAD must be set so there is no negative amortisation (paying it must not make the balance grow), and unpaid charges and taxes must not be capitalised for interest. Even so, paying only a small minimum can take many years and cost more in interest than you originally borrowed. Figures below are illustrative.
This guide belongs to the guide to choosing a cashback or reward card. It is general information, not financial advice.
What the minimum amount due usually includes
Each issuer sets its own formula in the MITC. A typical structure (illustrative):
| Component | Typically included in MAD |
|---|---|
| A percentage of the outstanding (e.g. about 5%) | Yes |
| All EMIs billed in the statement | Yes, in full |
| Interest, fees and GST for the cycle | Often in full |
| Any amount over your credit limit | Yes, in full |
| Any unpaid MAD from previous statements | Yes |
| A floor amount (e.g. ₹200) | If the percentage is very small |
The "no negative amortisation" rule means the minimum must at least cover what is added to the balance in a cycle, so the debt cannot grow if you pay it and stop spending.
Worked example: paying only the minimum (illustrative)
Balance ₹50,000. Interest 3.5% a month, plus 18% GST on interest (about 4.13% a month in total). MAD = 5% of the balance or ₹200, whichever is higher. No new spending. Simplified monthly calculation.
| Strategy | Months to clear | Total paid | Interest and GST |
|---|---|---|---|
| Pay only the minimum | about 273 months (over 22 years) | about ₹2,21,000 | about ₹1,71,000 |
| Pay a fixed ₹3,000 a month | 27 months | about ₹80,200 | about ₹30,200 |
| Pay a fixed ₹5,000 a month | 13 months | about ₹62,400 | about ₹12,400 |
After 12 months of minimum payments, you would have paid about ₹28,300 and still owe about ₹43,900. Real results vary with your issuer's MAD formula and interest method. Try your own balance and a fixed payment period in the card debt payoff calculator.
Why "minimum" does not mean "safe"
- Interest on everything. Paying ₹2,500 of a ₹50,000 bill still leaves ₹47,500 earning interest, and most cards charge from the transaction dates.
- No interest-free days on new spends. Every new purchase attracts interest from day one until the full balance is cleared.
- Rewards become irrelevant. On ₹50,000, a month of interest with GST (about ₹2,065) is more than 1.5% cashback on ₹1.3 lakh of spending.
- Credit score. Paying the minimum avoids a past-due report, but high utilisation month after month can still weigh on your score; see credit cards and CIBIL.
Options if you cannot pay in full
- Pay as much above the minimum as you can, and stop using the card for new purchases.
- Convert the balance to EMI on the card: a known interest rate and term, usually lower than revolving interest, plus a processing fee with GST. See card EMIs and no-cost EMIs.
- Use a cheaper loan to pay off the card, such as a personal loan from a regulated lender, if its APR is lower and you will not run the card up again.
- Talk to the issuer before you miss payments; ask about a structured repayment plan.
- Avoid paying one card with another through cash advances or wallet loads.
Example: EMI vs revolving (illustrative)
₹50,000 over 12 months:
- Revolving at 3.5% a month with fixed payments: about ₹5,174 a month (before GST on interest).
- EMI plan at 16% a year with a 1% fee: about ₹4,537 a month plus a ₹590 fee with GST.
The EMI saves roughly ₹7,000 over the year in this example, before GST on interest, which makes the gap larger.
What happens if you miss even the minimum
- A late payment charge with GST, if the account is past due for more than three days.
- Reporting to credit bureaus as past due.
- Possible loss of rewards or the card's benefits under its terms.
- Collection calls, which under the RBI directions must not involve intimidation or harassment.
If you are struggling, write to the issuer early. The RBI's Integrated Ombudsman Scheme is available for service failures; see credit card complaints.
Frequently asked questions
Does paying the minimum due hurt my credit score?
Paying it on time avoids a past-due record. Carrying a high balance can still affect your score through utilisation.
Why is my minimum due almost the full amount this month?
Probably because EMIs, fees, an overlimit amount or a previous unpaid minimum were included in full.
Can the minimum due be lower than the interest?
Under the RBI rule, it must be set so there is no negative amortisation.
Is it better to pay the minimum on two cards or clear one?
Pay at least the minimum on both to avoid late fees, then put the rest on the card with the higher interest.
Sources
- Reserve Bank of India — Credit Cards and Debit Cards: Issuance and Conduct Directions, 2025 (minimum amount due, interest, past due)
- RBI Complaint Management System — complaints about card issuers
- CBIC GST portal — GST on interest and fees
