How the minimum due keeps you paying for years
The minimum due on an Indian credit card is typically 5% of the outstanding balance, sometimes less. Interest on a revolving balance is usually 3.5% to 3.75% a month, and 18% GST is charged on that interest. Put those together and a large part of every minimum payment goes to the bank as interest and tax, with only a sliver reducing what you owe. And because the minimum is a percentage of a shrinking balance, the payment itself shrinks, so the balance falls more and more slowly.
Interest = balance × monthly rate
GST = interest × 18%
Minimum = balance × minimum % (at least ₹200)
Repaid = minimum − interest − GSTThe example, in plain numbers
The ticker under the result shows the same thing at human scale: every second the balance sits there, it grows. Leave this page open for a coffee break and watch.
Three ways out, in order of preference
- Stop adding to it. Once you carry a balance, new purchases usually attract interest from the day you swipe, because the interest-free period only applies when last month's bill was paid in full. Switch daily spending to UPI or a debit card until the card is clear.
- Pay a fixed amount, not the minimum. Decide an amount you can pay every month and set it as a standing instruction. Even a modest fixed payment shortens the timeline dramatically, because it doesn't shrink as the balance does.
- Replace expensive debt with cheaper debt. A personal loan at 12–16%, a loan against an FD, or a card's own EMI conversion offer at a lower rate can cut the cost by more than half. Close the gap for good by not running the card balance up again after you refinance.
What about the card's "convert to EMI" offer?
Banks often offer to convert a balance into EMIs at 13–24% a year plus a processing fee, and GST on both. It's usually cheaper than revolving at 42%+, but compare the total cost with a personal loan before you accept. The flat vs reducing rate calculator helps if the offer is quoted as a flat rate.
Protecting your credit score
Paying the minimum on time avoids late fees and keeps your repayment record clean, but a high balance relative to your limit (utilisation) still weighs on your credit score. Utilisation below 30% is a good target. Once the balance is gone, keep the card, pay it in full every month and enjoy the interest-free period as it was meant to be used. For several debts at once, use the debt avalanche calculator to decide which to clear first.
Frequently asked questions
Is paying the minimum due bad for my credit score?
Paying at least the minimum on time avoids a late-payment mark, so it's far better than missing a payment. But carrying a large balance keeps utilisation high and costs a lot in interest.
Why is GST charged on credit card interest?
Interest and fees on credit cards are treated as charges for a financial service, so 18% GST applies to them. It raises the real cost of a revolving balance.
Does the interest-free period still apply if I carry a balance?
Usually not. Most issuers charge interest on new purchases from the transaction date until the outstanding balance is cleared in full.