What is the Difference Between the Total Amount Due and the Minimum Amount Due?

Credit cards and their steadily augmenting popularity suggest the transformation taking place in the domain of the economy. They are redefining the procedure of maintaining the finances and incurring expenditures. Millennials are notorious for running out of money by the month’s end; this money only gets replenished with the succeeding month’s salary.

This very habit has somewhat contributed to the surge in the use of credit cards. Credit cards leave the ground open for people to spend significantly without paying a single rupee on the spot. Moreover, the discounts offered, the cash backs, redeemable reward points, and other benefits are too captivating to be left untouched.

Some premium credit cards even grant complimentary lounge access at airports, visits to the golf course, membership of certain airlines, and much more. When we analyze the gains of owning a credit card, everything appears convenient. However, the technicalities associated with credit cards are not simple and straightforward.

 It demands financial awareness and knowledge to successfully own a credit card without any hassle. So, before resolving to own a credit card, it is imperative to know about the jargon and other minute information. Two of those few technical terms linked to credit cards are the total amount due and minimum amount due. These two terms are incorporated in the monthly credit card statement or the credit card bill.

Total Amount Due

In a billing cycle, all the expenditures realized through the credit card get added. All the processing fees, joining or renewal fees, and other service charges are included. The tax waivers and other discounts get subtracted. The resultant amount gets reflected on the monthly credit card statement as the total amount due. This amount is the one that the cardholder owes to the bank or other financial institution.

The credit card bill mentions the deadline for paying off the dues. If paid in full, there’s no interest charged. However, if the balance rolls over to the subsequent month, the grace or the interest-free period gets done away with. Interest is charged daily on not only the outstanding balance but also on every purchase made thereafter. Hence, the only way of avoiding the interest is to pay off the bill completely.

Minimum Amount Due

Theminimum amount due is a tiny percentage of the total amount due. It is the least amount that the card-issuing bank expects the customer to settle on or before the due date. If one defaults in dispatching the minimum amount due, a steep penalty is incurred.

Moreover, there’s a risk involved of the credit card becoming invalid; not to forget the far-reaching negative impact on the credit score maintained by the credit information bureaus like Experian, CRISIL, etc. A negative bearing on the credit score diminishes the creditworthiness; this lowers the chances of acquiring another credit card or a loan in the future.

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Difference Between Total Amount Due and Minimum Amount Due

The total amount due and the minimum amount due are not the two sides of a coin. The total amount due is the cumulative result of every other spending during the billing period, any outstanding amount and interest charge, and any other fee.

The minimum amount due is just about 5% or more (as determined by the bank) and needs to be settled to keep the card active, and waive off the late payment charges. One can easily fall into the minimum due trap if there is a dearth of awareness. It can be mistaken for the total amount due, which will only enhance the credit burden with the addition of interest on the pending amount.

So, when you’re settling the RBL Bank credit card minimum payment, look out for the total amount due. Resort to clearing off the minimum amount only when there’s a scarcity of funds to wipe off the total debt. In other cases, ignore the RBL credit card minimum payment information and just focus on the total amount due. This will keep the credit score healthy, and prevent any unwarranted expenditure in the guise of interest.

The Bajaj Finserv RBL Bank SuperCard is a user’s delight, extending the functions of four cards in one — credit, EMI, loan, and cash. Get this credit card today by applying online in a few easy steps, and begin savoring its benefits.

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