If you are using an HDFC credit card, you may be fully aware of the various monthly fees and charges associated with it. If you take a look at your monthly credit card bill, you would see in details about the different charges that you need to pay. One such monthly charge is the Minimum Amount Due (MAD).
This is actually the minimum amount that you need to pay towards your credit card account in order to avoid the late payment fee. However, unlike paying the total amount due, if you pay only the minimum amount due, you would still be charged an interest on the balance outstanding amount. If you use an HDFC credit card, here’s everything that you need to know about the minimum amount due that you need to pay towards it every month.
The difference between the total amount due and the minimum amount due is simple to understand. While the total amount due is equal to your total expenditures on the card in any particular billing cycle, the minimum amount due is just a small percentage of the total amount spent.
If you opt to pay the total amount due on your card, you don’t need to pay any extra amount. On the other hand, paying the minimum amount due or any amount more than the minimum amount due but less than the total amount due would imply that you would be charged an interest on the balance amount.
The minimum amount due on your HDFC credit card is 5% of the total outstanding amount on the card or Rs.200, whichever is higher. Also, if there are any EMIs or unpaid dues from the previous statements, those will be added to your current outstanding and hence your minimum amount due also increases. You would be able to see it on your monthly credit card statement.
As already explained, paying the minimum amount due is just ensuring that you don’t need to pay any late payment charges. However, you would still have to pay interest on the balance amount. On paying the minimum amount due, the balance outstanding would be carried to your subsequent statements. Do bear in mind that the minimum amount due or any payment higher than that should be made on or before the payment due date which is also mentioned on your credit card statement.
Any payment that you make towards your credit card account would be first considered as a payment towards the minimum amount due. Once the minimum amount is paid, only then any further payment would be adjusted against other charges.
Also, on paying only the minimum amount due, you wouldn’t be able to enjoy the interest-free period that you normally do on making a purchase with your credit card. The interest amount would be charged from the date of purchase itself.
If you plan to pay your credit card bill only on its due date, be careful about the mode of payment that you choose. This is because some payment modes take a few days to process and reflect your payment. For example, for local cheques used to pay credit card balance, the amount would be credited to your card account only in 3 working days. So you would have to deposit the cheque at least 3 days before the due date.
If you fail to pay even the minimum amount due on your HDFC credit card, you will be charged a late payment fee that would be added to your next statement. The late payment charge depends on the total outstanding on the card.
Also, if you continue to default on payments, you will be sent reminders by the bank from time to time to settle the payment. It may also appoint a third party to get the payment from you. If you don’t make the payment even after all of these, the bank may suspend the facility on your credit card. Any reward points that you have accrued on your card may also be suspended by the bank.
The bank may also inform CIBIL about the non-payment of your credit card debt and hence your CIBIL score would drop.
|If the statement balance is||Late payment charges|
|Less than Rs.100||NIL|
|Between Rs.100 to Rs.500||Rs.100|
|Between Rs.501 to Rs.5,000||Rs.400|
|Between Rs.5,000 to Rs.10,000||Rs.500|
You can pay the minimum amount due on your HDFC credit card in any of the ways through which you pay the total outstanding on the card. You can pay the minimum amount due through HDFC net banking, HDFC mobile banking apps, HDFC Bank mobile banking through browser, ATM funds transfer, over-the-counter payment, cheque payment, or through the Autopay option.
Non-HDFC Bank customers can opt for NEFT, Visa Money Transfer, or Non-HDFC net banking.
Always try to pay the total amount due on your credit card. If that’s not possible, pay the closest amount that you can. That’s because the interest on the balance amount keeps growing at the fast rate of 2% to 3.5% per month (revolving credit). So eventually, you may end up paying a large sum of money only as interest charges.
Also, your credit score may take a hit if you continue paying only the minimum amount due on your credit card. Doing it once in a while is fine, but you shouldn’t fail regularly in paying the total amount due on our credit card.
The final amount depends on several factors like the total outstanding amount and the duration for which you only pay the minimum amount due. For a better understanding, consider the following example.
Let the total outstanding on your credit card be Rs.50,000 and hence the first minimum amount due (5%) would be Rs.2,500. Let’s assume the finance charge on revolving credit is 24% p.a. Your first interest charge is Rs.1,000. So, by paying the minimum due, you only clear Rs.1,500 from your principal amount. If you pay Rs.2,500 every month, it will take you 26 months to clear the bill and you will end up paying the bank a total of Rs.65,000. This is assuming you do not make any further purchases and pay Rs.2,500 every month without fail.
If you have any existing loan on your credit card, the minimum amount due would include the EMI on that loan. This would be repeated until the entire loan amount along with the interest is repaid to the bank.
Yes, the process of calculating the minimum amount due is same for all HDFC credit cards.
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