minimum balance on credit card

Paying credit card bills on time before the end of the due date is very important and every credit cardholder is well aware of this. Credit cardholders are also provided with the option of settling the bill by making a minimum payment.

Check: What is the best time to make a credit card payment

Minimum Payment on a Credit Card

As the name suggests, the minimum payment on a credit card is the minimum amount the cardholder can make for that particular billing cycle. Usually, in the UAE the credit cardholders 3% – 5% of the bill amount as the minimum payment amount. This may vary from different providers. 

One advantage of the minimum payment facility is, it will help the cardholder at the time of critical financial situations where he can’t pay the credit card bill. The provider gives a payment due date by which the cardholder needs to make the bill payment, else there would be interest rate added along with the late payment fees. In order to escape the late payment fees, the cardholder can pay the minimum balance as prescribed in the credit card billing statement

Therefore during financial emergencies, an option that reduces your burden can be helpful. As not paying even the minimum amount can have a negative impact on the credit report and it is said that such negative impacts on the credit report are likely to stay for the next seven years, which can ultimately make your situation worse when you need a new loan or credit card later. 

Unless the critical financial situation is temporary for a maximum of one month, it is not advised to pay your credit card bill less than the total bill amount. Even though the minimum payment is made on the credit card bill, once the due date has passed, there will be interest rates added from them. The interest rates on a credit card are high and it can end you up with a huge interest rate and the expensive balance on the credit card which can make your financial situation even worse. 

Therefore eventually not paying a credit card bill or making the minimum payment can land you in a credit card debt which is hard to recover. So paying the minimum amount can only save you from the late payment penalty, other than that it is a lose-lose situation considering the impact on the credit report and the high-interest rates on credit cards. 

Firstly, a credit cardholder must understand the usage of the card. It is better not to use more than 20% – 30% of the credit limit. Coming to the bill payments, it is always recommended to pay your credit card bills in full and on time. If you have any genuine reason, then you can opt for minimum payment but ensure that you clear the rest of the bill amount at the earliest or at least before the next bill is generated. But don’t make the minimum payment as a habit which is debt pitfall.

Also, check: What should you know before increasing your credit limit

The minimum payment is one benefit provided on the credit card, which the cardholder must not take it for granted. Else it can affect not only him but also his credit score adversely.    

Meet the author
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Nikitha is a Senior Analyst at She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.

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