Minimum Due Credit Card Calculator

Today, every bank/nbfc is offering various types of credit cards. There is also a surge in credit card usage. There is no doubt that there are many benefits of using credit cards. It can be used to:

✧ A credit card can be used to pay almost anywhere be it malls, retail shops, petrol pumps. It can also be used to shop online, pay bills and other expenses, etc.

✧ A credit card increases the purchasing power of its’ user. One can make big purchases and pay for it through EMIs instead of needing to pay the full amount in one go.

✧ Using a credit card wisely can also increase your credit score.

✧ A credit card can be very useful in emergency cases such as a medical emergency where you do not have sufficient money available with you.

✧ By using credit cards, one can avail various offers, cashback, reward points.

To fulfill the instant credit needs of the customer, there are many types of credit cards available such as:

1. Basic Credit Cards

2. Secured Credit Cards

3. No Annual Fee Credit Cards

4. Low-Interest Credit Cards

5. Balance Transfer Credit Cards

6. Rewards Credit Cards

7. Cashback Credit Cards

8. Travel Credit Cards

9. Entertainment Credit Cards

10. Airmiles Credit Cards

11. Lifestyle Credit Cards

12. Premium Credit Cards

13. Co-Branded Credit Cards

14. Student Credit Cards

15. Business Credit Cards

16. Prepaid Credit Cards

The annual Interest rate of credit cards starts from 14% to a maximum of 48%. These interest rates are the future value of the credit amount which the lending institution expects to earn from you. But, what will happen if you are not clearing the credit card due amount in full?

Do you pay off all your credit card dues by the due date or do you make minimum payment and carry forward the balance amount?

Credit cards are fast loans to fulfill your instant needs. Whichever service is instant and fast, has a cost. Upto 48% annual interest.

Many people pay only 5% of the total outstanding due amount which is also known as Minimum Due Amount. By paying the minimum due, they carry forward their debt to the next month and they again make only the minimum due payment and thus the cycle goes on.

Do you know by paying only 5% i.e. minimum due, how long will it take to clear your credit card dues and how much interest you will be paying without making any additional purchases?

Let’s understand this with the help of an example, suppose Suresh has a credit card with total credit limit of 1 Lakh. He has used Rs. 90,000/- out of his total credit limit and now he is paying 5% (Minimum Due Amount) that is Rs. 4,500/- every month as he is unable to pay Rs. 90,000/- in one go. Now, if Suresh pays only 5% i.e. Rs. 4,500/- every month, on annual interest rate of 42%, it will take him 2 years and 11 months to clear the balance amount of Rs. 90,000/- and the total interest that he will be paying would be Rs. 67,490/- which is 75% more on top of the balance amount of Rs. 90,000/- !

The value of money (Rs. 90,000/-) has increased 75% (interest: Rs. 67,490/-) = Rs. 1,57,490/-

This is the scenario in case Suresh DOES NOT make any additional purchases on his credit card. In case, he uses the remaining Rs. 10,000/- out of his credit limit and continues to make just 5% minimum payment, then you can imagine how much extra he would be paying in the long run!

When you understand the concept of Minimum Due payment disadvantages, you will be able to use your credit card wisely without hurting your credit score as you can work on alternate methods of clearing your credit card debts such as by availing personal loan or by making percentage-wise increased payments towards your credit card. If there is a problem, then there also a solution.

By using Minimum Due Credit Card calculator, you can check for yourself or any of your family members/friends/colleagues how they are using their credit card. Are you or they paying only Minimum Amount due every month? How long will it take to clear yours/their debt?

How To Use Minimum Due Credit Card Calculator?

(i) Enter the Balance Amount, that is, the amount you have used on your credit card.

(ii) Enter Annual Interest. You can check your card’s annual interest by going through your credit card statement.

(iii) The Minimum Due percentage is already set at 5% by default because in India, Minimum Due is calculated as 5% of total balance amount.

(iv) This will automatically calculate your Minimum Due Amount and the Result will be displayed to you.

The Result Will Tell You:

✧ Years in which your credit card debt will be repaid

✧ Total Interest Payable

✧ Total Principal Payable

✧ Total Amount (interest+principal) payable

Benefits of Minimum Due Credit Card Calculator:

✧ It can help you determine how long it will take you to become debt-free.

✧ It can help you make your own debt repayment plan.

✧ It can help you in figuring out if taking a Personal Loan or a Debt Consolidation Loan will be more beneficial.

✧ It will encourage you to use credit card wisely.