What is minimum amount due in credit card bill: So you are feeling proud among your friends as you have done your first shopping with your credit card. May be you have purchased something costly or gave your friends a nice treat and paid the bill with your credit card. This is very common and a style statement among many college goers.
But in the back of your mind many questions might arise like: how to pay that large amount of credit card bill in the next month, what happens if I only pay the minimum payment on my credit card and what is minimum balance due in credit card. In such a scenario if you call your bank and ask them for help they will straight away provide you some relief by informing you some important features of credit card bill payment.
Let’s discuss about these features of credit cards which is widely used these days to handle expenses without cash by many. Let’s take a snapshot of credit card statement I received this month to explain with some real-time data.
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Now here you can see total amount due by 07-04-2017 is 9985.90/- and also there is another term called minimum amount due which is 500/-. Besides that I have another way with which I can enjoy an extended interest free period called grace period.
What is Grace Period in Credit Card
Generally Credit card has a grace period even after the billing date so that user can have enough time to enjoy a interest free time with that money and also get enough time to repay the money. This is a main feature of credit card for which it is so popular.
Now in your case let’s say you have done the expense on 01/03/2017 and your billing date will be 31/03/2017. But as there is a grace period of 25 days you can pay the bill within next 25 days means before 25/04/2017. So your tension will be reduced now as you have 55 days to arrange that cash that you have spent on your credit card. But to enjoy the grace period also you have to make sure that you have paid the minimum amount due mentioned above.
What is Minimum Balance Due in Credit Card
This is the amount which user can pay and avoid the interest burden on the total due amount till grace period ends. Means here in this example if I pay Rs 500 then I can enjoy interest free period of next 25 days and also there will be no late payment charges as well.
Credit Card Minimum Payment vs Full Payment
Is paying minimum amount due a good step for you? Does paying minimum on credit card hurt credit score? What happens if you pay only the minimum payment on your credit card? So you might be thinking that banks are so nice as they allow you to spend their money and also will not charge you interest even after you miss the billing date. But this is not the actual fact.
Whenever someone misses billing due date then s/he has to pay the interest on the due amount and that’s where bank’s are earning money with this credit card concept. So it means if every one pay the money on time then there will be no profit for bank by launching this cards. But we are not lucky enough as most of us love to fall financial traps where these bank make money.
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In case of minimum amount due if you pay that small amount and forget to repay the balance by the end of grace period you have to pay 3% interest on that balance and also this will add with the next month bill and increase you debt burden. In the next month you will again follow the same concept and your debt burden will increase more and more.
So if you use this minimum amount due concept then make sure pay the balance before grace period end date to avoid higher interest charges. Be a responsible person for your family and use credit card only whenever required. And utilize that 55 days of grace period wisely so that you manage your financial problems and also avoid unnecessary expenses by paying late payment charges, interests etc.
This will also help your credit score good or else it might impact as bank’s use to report late payment activity. Hope now you are clear about what is minimum amount due in credit card bill and credit card pay in full vs minimum payment. Please feel free to post your queries regarding credit card minimum balance payment. Also don’t forget to share the article, if you found this helpful.