Credit Card Minimum Payment Trap
The horrifying math of paying only the minimum due. Most balances literally never clear at the minimum payment rate.
Your numbers
Your result
If you pay only the 5% minimum every month on a ₹1 lakh balance at 3.5%/month (42% annualised), it takes 226 months (18.8 years) to clear, and you pay ₹2.04 lakh in interest. Paying just 10% of the original balance every month clears it in 13 months with only ₹25,265 interest.
- First minimum payment due
- ₹5,000
- Months to pay off at minimum
- 226
- Total interest at minimum
- ₹2.04 lakh
- Total amount paid
- ₹3.04 lakh
- Alternative: 10% fixed payment
- 13 months
- Interest at 10% fixed
- ₹25,265
paisaexpert.com
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Compare with a balance transfer offer
If you cannot pay in full, a 1% balance transfer to a personal loan (10-14%) is usually cheaper than the 36-48% credit card rate. Run the math.
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Why Indian credit cards are the most expensive consumer debt
Most Indian credit cards charge 3-3.99% per month on revolving balances, which annualises to roughly 36-48% APR. Plus 18% GST on the interest itself. Plus late payment fees (₹500-1,300 if you miss the minimum due date). Plus the loss of your interest-free grace period on new purchases the moment you carry a balance from the previous cycle. The total all-in cost for a ₹1 lakh revolving balance is typically ₹40,000-55,000 per year.
The only sane usage rule for credit cards in India
- Pay in full every month, no exceptions. If you cannot do that, do not use credit cards.
- If you have outstanding card debt right now: take a personal loan at 10-14% to clear it, then close the card mentally (or literally cut it up).
- Treat the credit card statement amount as your "true spend," not the balance you can carry. Anything you cannot pay in full was over-budget.