Last updated: February 10, 2023, 3:56 PM IST
Sometimes it just so happens that we spend a lot impulsively during the month, and by the time we get our credit card bill, our cash flow is already tight. In such circumstances we may not always be able to pay the full amount due. A hefty interest is also charged on any amount that is not paid in full at the end of the month. The minimum amount owed can save us in these difficult times. But how? Let’s know What is the minimum amount due or the minimum payment?
The minimum amount due (MAD) is the amount you must pay to the relevant credit card company on or before the due date to maintain the operation of your card account. By paying the minimum amount due, customers guarantee that he/she will be responsible for the interest when it is due. There are no fines or fees for late payments.
Advantages
If you pay the minimum amount due on time, your credit card company or bank will not report you to a credit bureau with a bad score.
Your credit score will suffer if you don’t make credit card payments on time. You can prevent this by making at least the minimum required payment as stated in your credit agreement.
Cons
An important advantage of paying off your credit card balance is that you receive an interest-free grace period of up to two months. In addition, you have up to three weeks after sending the statement to pay the outstanding balance.
If you pay the Minimum Amount Due (MAD), the customer will not receive an interest-free credit period. Instead, interest will be added to his or her balance from the date of purchase.
Until you have paid the debt, the interest will also continue to accrue. So even if you have paid the Minimum Amount
Due and avoided paying late payment penalties, you must pay the burgeoning interest.
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