A lot of things need to be kept in mind while using a credit card. The minimum amount due is the most important thing to do when using a credit card. This is actually a small fraction of the entire credit card bill. If you pay the minimum amount due, you will not have to pay late payment charges.
In this era of Digital India, How to Use Credit Card is being used extensively. Not only in metro cities, but also in small towns and many rural areas, people use credit cards. A lot of things need to be kept in mind while using a credit card. The most important thing to do with a credit card is the minimum amount due, which every credit card statement shows. Sometimes people feel that if they pay at least that amount, the work will go on. Let's understand the full game of minimum amount dues.
What is Minimum Amount due -
The minimum amount due on a credit card is a small fraction of the total credit card bill. Usually, it is only 5 per cent. Credit card companies write total bills, minimum amount dues and dues on the statement. At times, people think of paying the minimum amount due and feel that there will be no charge on them.
So what is the benefit of paying the minimum amount due -
If a person pays the minimum dues, he will not be required to pay late payment charges. However, after that, your loan can grow faster, as the unpaid bill is charged as a finance charge on a daily basis. That is, if your bill is Rs. 50,000 and your minimum amount is Rs. 2500, then just paying Rs. 2500 will not help you. Even though you may not be charged late payment charges, you will be charged a hefty interest every day on your bill, which will result in huge losses.
And that 's how banks make big money -
People often wonder why credit card companies give a lot of reward points on bill payments? What does this mean for these companies? How do these companies make money? The game of minimum amount dues is also a source of revenue for these companies. If you are late even a single day from the due date, you are charged a hefty interest, which can go up to 48 per cent. The problem is that the interest is calculated on a daily basis. That is, the longer you delay in paying your bills, the more advantage credit card companies get.
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