Short answer: paying only the minimum due keeps your card out of default, but it is the most expensive way to repay. The unpaid part of the bill carries interest of up to 3.75% a month (45% a year) on cards like Federal Bank's, GST at 18% is charged on that interest, and every new purchase loses its interest-free period until the whole balance is cleared. On a ₹1 lakh balance, paying ₹5,000 a month takes about 50 months and costs about ₹1.5 lakh in interest and GST.
This article is part of our series on getting out of multiple loans. If card dues are one of several EMIs you are juggling, read the six warning signs too, and try your own numbers in the loan consolidation calculator.
What is the minimum amount due on a credit card?
The minimum amount due is the smallest payment that keeps your card in good standing for the month. It is not a discount on the bill: the rest of the bill is still owed, and it starts carrying interest. Each bank sets its own formula in the card's Most Important Terms and Conditions (MITC).
Federal Bank's MITC, for example, sets the minimum due as all GST, the month's EMI instalments, the larger of all fees and charges plus 2% of spends, cash and interest, or ₹200, plus any unpaid earlier minimum and any amount over the limit. In plain words: the minimum due mostly covers charges and only a small slice of what you actually spent.
Since March 2024 RBI has required card statements to carry this warning: "Making only the minimum payment every month would result in the repayment stretching over months/years."
What does paying only the minimum due cost you?
Three costs start the day you pay less than the total amount due:
- Interest on the unpaid balance. Federal Bank charges up to 3.75% a month (45% a year). TransUnion CIBIL says card interest "can be as high as 36 percent per annum". Either way it is three to four times what a bank personal loan costs.
- GST on the interest. GST at 18% is charged on card interest, fees and late charges (IndusInd Bank). On ₹3,750 of interest that adds ₹675.
- No more interest-free period. Federal Bank's terms say that if a cardholder pays less than the total amount due, "all new transactions will also attract interest charges". A purchase you make tomorrow starts costing interest from the day you make it, until the old balance is fully paid.
If you pay less than even the minimum, a late payment fee is added (Federal Bank: ₹1,000 when the total due is ₹5,001 to ₹25,000, ₹1,250 above ₹25,000). Under RBI's rules a card is charged late fees only once the payment is more than three days past the due date, and only on the amount still unpaid after the due date. A missed payment is also reported to the credit bureaus.
Worked example: ₹1 lakh card balance
Assume a balance of ₹1,00,000 on a card charging 3.75% a month, 18% GST on the interest, and no new spending. Each month's charge is therefore 3.75% × 1.18 = 4.425% of the balance.
Month one: interest ₹3,750 plus GST ₹675 = ₹4,425. If you pay ₹5,000, only ₹575 reduces the balance. If you pay ₹4,425 or less, the balance never falls at all.
| How you repay ₹1,00,000 | Monthly payment | Months to clear | Interest and GST paid | Total paid |
|---|---|---|---|---|
| Card, paying ₹5,000 a month | ₹5,000 | about 50 | about ₹1,49,760 | about ₹2,49,760 |
| Card, paying ₹10,000 a month | ₹10,000 | about 14 | about ₹35,000 | about ₹1,35,000 |
| Personal loan at 11.60% a year, 3 years | about ₹3,302 | 36 | about ₹18,885 | about ₹1,18,885 |
| Personal loan at 16.50% a year, 3 years | about ₹3,540 | 36 | about ₹27,456 | about ₹1,27,456 |
The personal loan rates are ICICI Bank's published mean (11.60%) and the top of its range (16.50%). A personal loan also has a processing fee: up to 2% plus taxes at ICICI Bank, about ₹2,360 on ₹1 lakh. Even with the fee, the loan costs a fraction of the ₹5,000-a-month card route, with a lower monthly payment.
After 12 months of paying ₹5,000 on the card, you have paid ₹60,000 and still owe about ₹91,150. After 24 months (₹1.2 lakh paid), you still owe about ₹76,260.
This is simplified: banks charge interest daily from each transaction date, and any new spending, cash withdrawal or late fee makes the numbers worse. Use your own card's rate from its MITC or statement.
How does carrying a card balance affect your CIBIL score?
Paying at least the minimum by the due date avoids a missed payment, which is the entry that hurts most. But the unpaid balance still counts. TransUnion CIBIL says keeping card spending within 30% of your limit is a healthy ratio. A ₹1 lakh balance on a ₹1.2 lakh limit is about 83%, and a balance that grows each month keeps it there.
Lenders also see the full outstanding on your report, not the minimum due. When you apply for any loan, that balance counts against your repayment capacity.
Signs you are in the minimum due trap
- Your balance is about the same as, or higher than, it was three months ago, even though you pay every month.
- The interest and GST lines on your statement are more than a third of what you pay.
- You use one card, or an app loan, to pay another card.
- You have stopped checking the total due and only look at the minimum.
- More than one card is in this state.
One of these is a warning. Two or more means the card is now a long-term loan at 36% to 45% a year, and it is time to change how you repay it.
How to get out of the minimum due trap
Work through these in order:
- Stop new spending on the card that carries a balance. Every new purchase starts charging interest at once. Use a debit card or UPI until the balance is cleared.
- Pay more than the minimum, always. In the example, doubling the payment from ₹5,000 to ₹10,000 cuts the cost from about ₹1.5 lakh to about ₹35,000.
- If you have several cards, attack the costliest first. Pay minimums on all of them on time, and put every spare rupee on the card with the highest rate.
- Ask your bank about converting the balance into EMIs. Many banks offer this on outstanding balances. Check the rate, processing fee and GST in writing before you accept, and compare it with a personal loan.
- Replace the card debt with one cheaper loan. A personal loan at a bank rate can clear the card in full, so you pay one fixed EMI and the balance has an end date. If you also have app loans or personal loans, merge them together: see credit card EMI consolidation and how to merge multiple EMIs into one.
- Do not close the card the day you clear it without thinking. An open card with a zero balance helps your utilisation. Close it only if you know you will run it up again.
Do not take an app loan or a payday loan to pay a card bill. That swaps 3.75% a month for a loan that is due in one go on your next salary.
How many credit cards can AdvanceCred merge?
AdvanceCred works on cases with up to 5 credit cards, together with up to 5 app loans and personal loans in total and up to 1 payday loan. These are AdvanceCred's own case limits. Within them, the bank or NBFC still checks your income, existing EMIs and credit report and decides approval, amount, rate and tenure. If you are over the limits, see how many loans can be merged into one for what to do first.
How AdvanceCred can help
AdvanceCred is a credit advisory and loan intermediation firm based in Mumbai. It is not a lender. An advisor goes through your card statements and loans with you, checks whether a debt consolidation loan from a partner bank or NBFC can clear the cards in one go, and explains the EMI, fees and total cost before you apply. Leave your details below or check your numbers in the loan consolidation calculator first.
Sources
Checked on 4 November 2026 unless dated otherwise. The ₹1 lakh balance, payments and "no new spending" are assumptions for illustration; months, totals and EMIs are AdvanceCred's own arithmetic (monthly compounding, interest plus 18% GST each month). AdvanceCred's case limits are its own policy (set 30 October 2026).
- Federal Bank, Credit cards Most Important Terms and Conditions (finance charge up to 3.75% a month, 45% a year; minimum amount due formula; new transactions attract interest when less than the total is paid; late payment fee slabs; GST on fees and interest), checked 4 November 2026: federal.bank.in
- Reserve Bank of India, Amendment to the Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022, RBI/2023-24/132, 7 March 2024 (minimum payment warning on statements; interest only on the outstanding amount; late charges only after more than three days past due, on the amount unpaid after the due date): rbi.org.in
- IndusInd Bank, "What is the GST rate for a credit card?" (GST at 18% on card interest, fees and late charges), checked 4 November 2026: indusind.bank.in
- TransUnion CIBIL, "Six ways you can use your credit card for an optimum credit score" (interest "can be as high as 36 percent per annum"; 30% utilisation "a healthy ratio"), checked 4 November 2026: cibil.com
- ICICI Bank, Personal loan interest rates (9.99% to 16.50% p.a.; mean 11.60% for July to September 2026; processing fee up to 2% plus taxes), checked 1 November 2026: icici.bank.in