Sometimes it just so happens that we spend a lot on impulse during the month, and by the time we get our credit card bill, our cash flow is already tight. We might not always be able to pay the full sum owed in such circumstances. Any sum that is not paid in full by the end of the month also accrues hefty interest. The Minimum Amount Due can save us during these trying times. But how? Let’s know What is the minimum amount due or minimal payment?
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The Minimum Amount Due (MAD) is the sum that you must pay to the relevant credit card company on or before the due date to maintain the operation of your card account. By paying the Minimum Amount Due, customers guarantee that he/ she will be responsible for the interest when it’s due. There won’t be any fines or fees for paying late.
Advantages
If you pay the minimum amount due on time, your credit card company or bank will not report you to a credit bureau with a bad score.
Your credit score will suffer if you don’t make credit card payments on time. You can prevent this by making at least the minimum payment required as stated in your credit agreement.
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Disadvantages
One significant benefit of paying off your credit card balance is that you receive an interest-free grace period of up to two months. Additionally, you will have up to three weeks after the statement is sent to pay the balance due.
If you pay the Minimum Amount Due (MAD) then the customer will not be given an interest-free credit period. Instead, interest will be added to his or her balance as of the purchase date.
Up until you pay the debt, interest will also continue to accrue. Therefore, even if you have paid the Minimum Amount Due and avoided paying any late payment penalties, you have to pay the burgeoning interest.
