Why should credit card users avoid paying minimum due instead of entire bill?

At the end of the credit card billing cycle, the credit card company sends you the bill and gives you two weeks to clear it. You would typically have two options at this stage: pay the credit card bill in full or only pay the minimum due. However tempting it may appear, it is recommended not to choose the minimum due option. Instead, the card users must clear the entire bill in one go.

Here, we share the key reasons for paying the entire bill instead of the minimum due.

Why paying the entire bill is a wise decision

I. Higher interest rate: The interest credit cards charge is quite high—sometimes 2 to 3 per cent per month. Therefore, when you delay the payment by three months, you lose 9 per cent of the overall bill in interest.

This is why you should avoid paying minimum interest and instead pay the entire bill.

II. 45-day interest-free period: One key advantage of the 45-day interest-free period is that cardholders do not need to pay interest during it. However, when this time period ends, interest starts accruing from the date of the transaction, not from the end of this interest-free period.

III. Affects credit score: Paying only the minimum due and not the entire bill adversely affects your credit score.

IV. Chances of debt trap: When you do not pay the entire bill, the interest and late charges keep piling up, thus pushing the cardholder into a debt trap. This must be avoided at all costs.

V. Inculcating a bad habit: The tendency to pay a tiny amount instead of the entire amount leads to the development of a bad habit.

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