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Your account stays current, your credit report stays clean, and your score doesn't drop. That's precisely what makes this dangerous. Paying the minimum each month is treated as paying on time, so none of the usual warning lights come on — while the balance compounds at a rate most people never work out in annual terms. RBI requires a warning about exactly this to appear on every single billing statement you receive. Almost nobody reads it.
The warning on your own statement
Start here, because it's the most verifiable thing in this article.
Under the RBI Master Direction on Credit Card and Debit Card – Issuance and Conduct, 2022, card issuers must prominently display on all billing statements a warning to the effect that making only the minimum payment every month would result in the repayment stretching over months or years, with consequential compounded interest payment on your outstanding balance.
That's a regulator-mandated caution, printed on your bill, every month. The fact that it had to be mandated tells you how the product behaves when people don't understand it.
Go and look at last month's statement. It's there.
What the minimum due actually is
The minimum amount due is the smallest payment that keeps your account from being treated as overdue. It's a fraction of what you owe — commonly a small percentage of the outstanding balance plus any fees and interest already charged, subject to a floor.
What it is not: a suggested payment, a recommended amount, or anything to do with what you can afford. It's the threshold below which the lender starts treating you as delinquent. Paying it buys you one thing only — your account isn't reported as past due.
The RBI directions require the terms to be set so there's no negative amortisation, meaning the minimum must at least stop your balance growing purely from unpaid charges. That's a floor on how bad it can get, not a sign the arrangement is working for you.
Why your credit report stays clean
Here's the mechanism that makes this different from every other credit problem we write about.
Under the same Master Direction, a credit card account is reported as past due to the credit bureaus only when it remains past due for more than three days after the due date. Pay the minimum on time and you're not past due at all. The bureau sees a payment made on schedule.
So your payment history — the heaviest factor in any scoring model — stays spotless. Month after month. While the balance climbs.
Compare that with a default, where the report tells you something is wrong immediately and keeps telling you for years (how long a default stays on your credit report). Minimum-due debt is silent. People discover it when a loan application gets declined, not when their score moves.
Where it does reach your score
Indirectly, and with a delay, through credit utilisation.
As the balance grows, the share of your limit you're using grows with it. Utilisation is one of the heaviest factors after payment history, and unlike payment history it's read from your current reported balance, so it moves as the debt moves.
A card creeping from 30% to 60% to 85% utilisation will pull your score down steadily even though every payment was made on time. And because the cause is a balance rather than a missed payment, nothing on the report says why. We go through the mechanics, including the statement-date timing that catches people out, in how much of your credit limit should you actually use.
The interest-free period disappears
This is the part that surprises people most, and it's in the regulation.
The Master Direction requires issuers to explain that the interest-free credit period is suspended if any balance from the previous month's bill is outstanding. Issuers also have to specify, in the billing statement, the level of part-payment at which interest-free benefits stop being available.
In plain terms: while you pay in full each month, purchases are interest-free from the transaction date to the due date. The moment you carry a balance forward, that protection typically goes. New purchases start attracting interest from the day you make them, not from the next due date.
So the month you first pay the minimum, the card quietly changes from a payment instrument into a loan — and everything you buy on it from then on is borrowed at the card's interest rate.
Getting back to the interest-free position generally requires clearing the full outstanding.
What it actually costs
Credit card interest is quoted monthly, which is the single biggest reason people underestimate it. A monthly rate in the low single digits sounds modest. Annualised and compounded, it sits far above almost any other borrowing available to a retail customer in India.
The RBI directions require issuers to quote Annualised Percentage Rates for different situations, including non-payment of the minimum amount due. Find that figure in your card's Most Important Terms and Conditions and read it as the real price. It's the number worth comparing against any other way you could fund the same spending.
When it's the right call
Honestly: sometimes it is.
If you've had a bad month and the choice is between paying the minimum and missing the payment entirely, pay the minimum. Missing it means the account can be reported past due, late charges apply, and you've started something that takes years to clear rather than months. One month of minimum payment is an expensive but contained decision.
The problem isn't the tool. It's using it as a default setting. A stopgap you use twice a year is a feature. A stopgap you use every month is the most expensive loan in your life, and it doesn't show up anywhere you'd look for it.
How to get out
Work out the real number first. Your outstanding balance and the annualised rate from your MITC. Not the monthly rate.
Pay more than the minimum, by whatever you can. There's no threshold to cross — every rupee above the minimum goes against the balance instead of the interest.
Stop adding to the card while you're carrying a balance. With the interest-free period suspended, new spending starts costing you immediately.
If you have more than one card, decide an order and commit to it. Clearing the highest-rate balance first costs you least overall. Clearing the smallest first gives you a win sooner. Both work. Drifting between them doesn't.
Consider whether a cheaper form of borrowing exists. A personal loan at a materially lower rate to clear card debt can cost less in total, though it replaces flexible debt with a fixed obligation and adds a hard enquiry. Think it through rather than treating it as an automatic fix.
Watch your utilisation as it falls, because that's where the score improvement shows up. You can check your CRIF report free to see what's being reported.
Don't close the card once it's clear. Closing it removes its limit from your available credit and pushes utilisation back up on whatever remains — the arithmetic is in why your score dropped after closing a loan.
Frequently asked questions
Q.1 Does paying only the minimum due hurt my credit score?
Not directly. Paying the minimum by the due date means the account is not reported as past due, so your payment history stays clean. The damage reaches your score indirectly, through the rising balance pushing your credit utilisation up.
Q.2 What is the minimum amount due?
It is the smallest amount you can pay by the due date to keep the account from being treated as overdue. It is a fraction of what you owe, and paying it does not stop interest accruing on the rest.
Q.3 Do I lose the interest-free period if I pay only the minimum?
Yes. Under RBI's Master Direction, card issuers must explain that the interest-free credit period is suspended if any balance from the previous month's bill is outstanding. Once you carry a balance, new purchases typically start attracting interest from the transaction date.
Q.4 Is there an official warning about this?
Yes. RBI requires every billing statement to prominently display a warning that making only the minimum payment each month will stretch repayment over months or years with compounded interest on the outstanding balance.
Q.5 Is paying the minimum ever the right move?
As a one-month stopgap in a genuine cash crunch, yes — it is far better than missing the payment entirely, which does damage your report. As a habit it is one of the most expensive ways to borrow.
Q.6 When is a credit card reported as past due?
Under the RBI Master Direction, a credit card account is reported as past due to credit information companies only when it remains past due for more than three days after the due date.
Sources: RBI Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022, RBI/2022-23/92, DoR.AUT.REC.No.27/24.01.041/2022-23, dated 21 April 2022, as updated; Credit Information Companies (Regulation) Act, 2005; RBI Credit Information Reporting Directions, 2025, as amended; CRIF High Mark consumer information.