The Minimum Payment Trap — Why India's Credit Card Debt Lasts a Decade

## The minimum payment is a trap by design Indian credit card minimum payments are typically set at 2–5% of outstanding balance or ₹200–500, whichever is higher. This low floor keeps customers indebted longer, maximizing interest revenue for the bank. The math is brutal: - ₹1 lakh balance at 3% per month interest = ₹3,000 interest in month 1 - 2% minimum payment = ₹2,000 - Net: your balance INCREASED by ₹1,000 even though you paid ₹2,000 Once the minimum payment floor kicks in (often ₹200), the bank can technically show you're paying — but you're making almost no progress. ## The statement "Amount Due" vs "Minimum Due" Every credit card statement shows two numbers: - **Total Amount Due**: Full balance — pay this to avoid any interest - **Minimum Amount Due**: Floor payment — pay this to avoid late fees, but interest still accrues on remaining balance Banks by regulation must show a warning on statements that paying only minimum increases total interest. Many people still only pay minimum. ## Breaking out **Triage approach:** 1. Calculate: can you pay off in 6 months with discipline? If yes, commit and sacrifice. 2. If 6 months isn't feasible, look at personal loan refinancing. 3. If even personal loan isn't possible, call the bank and ask about hardship programs. **What to say:** "I'm struggling to make more than minimum payments. Do you have a hardship program or can you convert my balance to a lower-rate EMI?" Banks prefer partial payment to defaults — they will often negotiate.