One of the most exciting features of a Credit Card is the grace period that it provides. Most Credit Cards provide a grace period of 45-50 days that allows you to spend without stress. Credit Card bills are generated each month. Their card limit resets accordingly. However, in certain situations, it happens that the credit cardholders are unable to pay the card bill. What usually happens in such cases? Let’s find out!
What if you are unable to pay your Credit Card bill?
In case you are unable to pay your Credit Card bill in full, you can still defer the card liability. All the Credit Card companies allow you to pay only a certain minimum amount instead of the whole Credit Card bill. This amount is also known as ‘Minimum Amount Due’. To continue using your Credit Card without paying the entire bill amount, you just need to pay the ‘Minimum Payment Due’. This amount is usually 10%-20% of the total bill amount. Once paid, the remaining amount gets carried over to the next cycle.
Things to keep in mind while paying ‘Minimum Amount Due’
You should keep the following points in mind while paying the ‘Minimum Amount Due’ of your Credit Card:
1. You should pay the minimum amount due on or before the Credit Card due date to keep your Credit Card operative.
2. Paying the minimum amount due on time ensures that no late payment charges are levied.
3. Paying the minimum amount due is far better than making no payment and denting your credit score adversely. If you don’t pay any amount, your credit score will fall. Conversely, if you pay at least the minimum amount due, then your credit score will not take a dip and you can continue using your Credit Card.
4. The companies will charge interest on the remaining unpaid amount. Further, the credit period gets eliminated i.e., the interest will be charged from the date of purchase instead of the date after the due date of payment. You should remember that the interest rate on Credit Cards is quite high.
5. The interest will keep accumulating until the dues are repaid by the Credit Card holder.
6. If you just pay the minimum amount due each month, you might eventually end up in a debt trap.
Till when you can just pay the minimum amount due?
A question arises – till when you can pay just the minimum amount due? The answer is, there’s no limit. You can keep repaying just the minimum amount due each month till the time you have sufficient funds to repay the entire amount. Every month, your Credit Card application or bill will show your transactions, the amount due, the interest as well as the minimum amount due that you can repay to continue using the Credit Card. However, you should be mindful of the fact that every time you delay the repayment, the interest will increase. This can lead to a debt trap if you don’t plan your repayment carefully.
Also Read: How to use a Credit Card effectively and smartly
In a nutshell
By now, you might have understood everything related to the Credit Cards and minimum payment due option that comes with it. However, choosing the right Credit Card is crucial to not only ensure good terms but also enjoy reward points and offers. Axis Bank provides you with multiple Credit Card options, each carrying unique features and benefits. These include cashback and discounts across different categories, savings on travel, airport lounge access, offers on dining and even welcome benefits. This ensures you save on every dime you spend. You can skim through different Credit Cards to find the one that best suits your lifestyle needs. Apply now for Axis Bank Credit Cards!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
