Credit Card Alert: The habit of paying minimum amount due can become heavy, understand the complete mathematics of interest and debt trap.

News India Live, Digital Desk: Credit card companies give two options in your bill ‘Total Due’ and ‘Minimum Due’. Many people, due to lack of cash or lack of information, remain relaxed by paying only the minimum due (usually 5% of the total bill). But do you know that it is like ‘poison’ for your financial health?1. What is ‘Minimum Amount Due’ (MAD)?Minimum Amount Due is the minimum amount you can pay only to avoid late fees. Paying it does not mean that interest will not be charged on your remaining bills.2. The calculation of huge interest: The interest charged on credit cards is the most expensive in India (ranging from 36% to 48% per annum). End of interest free period: As soon as you pay only the minimum due, the ‘interest free’ period of 45-50 days on your card ends. Instant interest on new expenses: After this, whatever new transaction you make with the card, it will attract huge interest from the very first day. It will start applying.3. Understand with an example (A Simple Example) Suppose your bill is ₹ 50,000 and you have paid only ₹ 2,500 (minimum due). Outstanding amount: ₹ 47,500Interest: Now about 3-4% monthly interest will be charged on this ₹ 47,500 per day. Result: Next month your bill will again cross ₹ 50,000 with the previous month’s interest and new expenses. If you keep paying only the minimum due, it may take you 10 to 15 years to repay this loan of ₹50,000!4. Bad effect on credit score: Continuously paying minimum dues signals to banks that you are ‘credit hungry’ and under debt pressure. This can damage your credit score (CIBIL), which will make it difficult to get a home loan or car loan in the future. Ways to Avoid This Trap: Always pay ‘Total Amount Due’: Try to pay the full amount of the bill on time. Opt for EMI: If you are not able to pay the entire amount, then convert the outstanding amount into a low interest EMI. This is much cheaper than paying the minimum due. Control wasteful expenditure: Use credit card only as per your paying capacity.