Major news for credit card users. These days, if you live in a city, chances are you have a credit card. It boosts your spending power and can be super useful when you need it. But if you don’t pay off your credit card balance on time, you could run into some trouble. So, it’s important for credit card holders to understand how to use them wisely.
When you go to settle your credit card bill, you’ll notice two key figures: your total bill and the Minimum Amount Due. A lot of folks think that paying just the minimum means they’re off the hook, but that’s not true. If you keep doing this, it could hurt your CIBIL score.
Now, what’s the minimum amount? When you swipe your credit card, there’s a billing cycle you need to follow. Ideally, you should pay the full amount during this time. But when your bill comes, you’ll see the option to pay just the minimum, which is a fraction of your total bill. If you choose to pay the minimum, make sure to do it by the deadline. Just keep in mind that paying only the minimum means you’ll rack up interest on the remaining balance.
Paying just the minimum amount usually doesn’t hurt your CIBIL score right away, but if you keep doing it, it can definitely have a negative effect. When you only pay the minimum, interest builds up on the remaining balance. Over time, this can lead to a cycle of debt where your loan amount grows instead of shrinks, which can lower your CIBIL score. Banks might see you as someone who struggles with cash flow in this situation.