Why credit card debt grows so fast
Indian credit cards typically charge 3–3.75% interest per month on unpaid balances, and 18% GST is added on that interest. Compounded monthly, 3.6% a month becomes over 50% a year. Worse, once you carry any balance, you usually lose the interest-free period on new purchases too, so interest starts from the day you swipe.
Worked example
interest = balance × monthly rate
balance = balance + interest − paymentThe minimum-due trap
The minimum amount due, usually 5% of your outstanding balance, is designed to keep your account in good standing, not to clear the debt. Most of that payment goes to interest. Paying it keeps you out of default but lets the debt last for years.
A better way out
- Stop adding to the balance. Use a debit card or UPI until the card is clear.
- Convert to EMI or take a cheaper loan. Card EMI conversions (often 13–24% a year) or a personal loan at 11–16% cost far less than 40–50% card interest. Compare them on the loan comparison calculator.
- Pay the most expensive card first if you have several. The debt avalanche calculator plans the order.
- Set up auto-pay for the full statement amount once you're clear, so it never happens again.
Frequently asked questions
What interest rate do credit cards charge in India?
Usually 3–3.75% a month, which is about 43–56% a year once compounded, plus 18% GST on the interest.
Does paying the minimum due hurt my credit score?
No, paying at least the minimum keeps you from being reported late. But a high balance compared with your limit (utilisation) can lower your score.
Is a balance transfer card available in India?
Some banks offer balance transfer at a low rate for a few months, with a fee. Clear the balance before the offer ends.