Why paying the credit card minimum amount due is a debt trap and how to get out of it?

You have a credit card with a bill of ₹30,000 due. Your billing cycle ends on the 13th, and the due date is the second of each month. Each time the due date approaches, you make a minimum payment of ₹1,500, believing that this provides you with some relief. However, little do you know that the debt meant to serve you is actually enslaving you. You are aware that a substantial amount of interest is charged each time you make only the minimum payment, but you did not realise how significant it would be. Month after month, the interest accumulates, and before you know it, you may find yourself trapped in a cycle that is difficult to break.

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You are not alone in this situation. Millions of credit card customers regularly make minimum payments without being aware of the consequences. Today, we will explain what the minimum payment is, how it works, and why this ‘easy’ option might actually end up being the most expensive choice.

What is the minimum amount due on a credit card?

The minimum amount due on a credit card is typically the lowest amount that your credit card issuer will accept as payment toward your balance each month. By paying the minimum amount due on your credit card every month, you help keep your credit card in good standing.

While this approach prevents late fees and penalty interest, the remaining balance will still be carried forward.

How is your minimum amount due calculated?

If you read your credit card bill carefully, you will see two amounts: one under total outstanding amount and one under minimum amount due. The minimum amount due on a credit card is calculated differently from bank to bank. Typically, your minimum amount due is the greater of a certain percentage of your balance (often 5%) or a flat minimum payment. Either method may be used to determine your minimum amount due on your credit card.

Suppose you have a credit card balance of ₹30,000 at an APR of 42%, which translates to a monthly interest rate of 3.5%.

Your minimum amount due is calculated as 5% of the total outstanding balance, amounting to ₹1,500 in the first month.

Now, let’s assume you make only the minimum payment due on your credit card each month, without adding any new expenses.

Paying the minimum credit card due every month? Check calculation to understand where your money goes

Here’s what happened after 12 Months.

Over the course of 12 months, you’ll end up paying a total of ₹16,607.80. But your principal—your actual debt—reduces by only ₹4,976.03. That means ₹11,631.77 of your payments go purely toward interest. Your outstanding balance drops from ₹30,000 to ₹25,023.97—a reduction of less than one-sixth over the year.

Even though you’ve paid over ₹16,600 across the year, your outstanding balance barely moved—only about 30% of what you paid went toward reducing your debt. The remaining 70% was spent on interest charges.

Minimum amount due or a debt trap?

It is important to make at least the minimum payment to keep your account current and avoid incurring late fees, penalty APRs, or hurting your credit score. But paying the minimum amount due on your credit card each month doesn’t reduce your debt—the remaining balance continues to accrue interest, often at rates between 30–45% per annum in India.

In our example, at an APR of 44%,

It will take 30+ years to pay off the debt if you only pay the minimum each month. You will pay back much more in interest than the original amount borrowed.

What is more worrisome is that this approach consumes your monthly cash flow without actually solving the problem. The slow repayment also impacts your credit score, as high credit utilisation (the ratio of your debt to your total credit limit) signals risk to lenders.

In short, minimum payments are not a repayment plan—they are a long-term profit strategy for credit card companies, built on your inaction.

Should you use your credit card when you keep paying the minimum amount due?

If you are still using the card while making minimum payments, your debt won’t just remain—it will grow. Any new purchases are added to the principal, which increases the interest due next month. As your outstanding balance grows, so does the minimum payment, which may soon become unmanageable.

This is how the debt spiral forms. You are not just treading water—you are sinking. Paying the minimum while continuing to swipe the card is like pouring water into a leaking boat. You’ll never catch up, and the burden compounds.

How to get out of credit card minimum amount payment trap

Escaping the minimum payment trap requires a structured approach:

• Always pay more than the minimum. Even an extra ₹2,000 a month can significantly cut interest costs.
• Use the avalanche method (pay off high-interest debts first) or snowball method (pay off the smallest balances first) to accelerate repayment.
• Avoid fresh spending on that card until the balance is cleared.
• Consider balance transfers to a lower-interest card or a personal loan to consolidate and reduce interest burden.
• Set up auto-pay for the full statement amount to avoid missing due dates.

Debt is a trap only if you stay inside it. Strategy and discipline are your exit.

When should you pay the credit card minimum amount due?

There are a few situations where paying the minimum can be a necessary compromise—but these should be temporary exceptions, not habits:

• Unexpected emergency where liquidity is critical
• Short-term cash crunch with a clear recovery plan
• Avoiding late payment penalties while you arrange full payment within weeks

Even in these scenarios, make a plan to pay off the full amount quickly. The minimum payment option is a safety net, not a repayment strategy.

Conclusion

Minimum payments offer short-term relief but long-term damage. They trick you into thinking you’re managing your debt when you are really just paying to keep it alive. With interest quietly accumulating and balances barely shrinking, you lose control over your financial future.

Break the illusion. Start paying more than the minimum. Treat your credit card as a tool, not a trap. Because the longer you delay, the more it costs—not just in money, but in lost freedom.