Paying only the minimum due keeps your card from being overdue, but the bill loses its interest-free days: interest runs from the day of each purchase on whatever is still unpaid. That is about 3% to 3.99% a month (36% to 48% a year in 2026, varying by issuer), plus 18% GST on the interest, and until the whole outstanding is cleared, new purchases lose their interest-free days too. On a ₹2,00,000 bill, such as a family trip or a hospital deposit, three months of this cost about ₹24,100.

Why is interest charged from the day you spent?

Under RBI's credit card directions (2022, consolidated in November 2025), the minimum amount due only stops the bill being treated as overdue. Pay less than the full bill by the due date and the interest-free period is lost: interest runs from the date of each transaction on whatever is still outstanding.

Card-issuers may not charge interest on unpaid GST or fees, but unpaid interest is itself charged interest, which is why every statement warns that paying only the minimum means compounded interest. Because the GST exemption on loan interest excludes card interest, this revolving credit carries 18% GST on its interest.

What does Deepak's ₹2,00,000 cost over three months?

Deepak earns ₹26 lakh fixed CTC, about ₹1,61,900 a month in hand (PF on full wages, the structure in CTC vs in hand salary). He put a ₹2,00,000 family trip on a ₹6 lakh-limit card and will pay only the minimum due until his bonus arrives in three months.

Assume he paid for the trip 10 days before the bill date, bills come every 30 days and fall due 20 days later, the credit card interest rate is 3.5% a month (42% a year, charged daily, including on billed interest until it is paid), and the minimum due is 5% of the bill or, if higher, the interest and GST on it. Issuers differ on the rate and the formula.

Day after the trip What happens Interest GST at 18%
30 Pays the ₹10,000 minimum (5% of ₹2,00,000)
40 Second bill: ₹2,00,000 for 30 days, ₹1,90,000 for 10 ₹9,090 ₹1,636
60 Pays the ₹10,727 minimum, exactly the interest and GST
70 Third bill: ₹1,90,000 for 30 days, ₹9,090 of interest for 20 ₹6,768 ₹1,218
90 Bonus clears ₹2,03,330, with interest since the third bill ₹4,528 ₹815
Total ₹20,387 ₹3,670

He pays ₹20,727 in minimums and still owes ₹1,90,000 of the ₹2,00,000 trip. The three months cost ₹24,057, about 15% of a month's take home. Paid in full by day 30, the trip would have cost nothing; the first ₹6,904 of interest is for the 30 days that were meant to be free.

What happens to your new purchases?

While any part of the earlier bill is unpaid, every new purchase is charged interest from the day it is made, even if you pay for it in full by its due date. With purchases spread through the month, each waits 20 to 50 days for its due date, 35 on average.

Monthly spending on the card Interest and GST a month Over three months
₹25,000 ₹1,188 ₹3,564
₹40,000 ₹1,901 ₹5,703
₹75,000 ₹3,564 ₹10,693

At the ₹40,000 a month Deepak puts on the card, the three months cost him about ₹29,800 in all, close to a fifth of a month's take home.

What are the cheaper ways out?

Converting the bill to EMI, usually before the due date, takes it off the revolving rate. Card EMI rates are usually 12% to 24% a year (2025), plus a processing fee and 18% GST on the interest and the fee, as the no cost EMI breakdown shows. Even over six months at 15%, Deepak's EMIs would be ₹34,807; interest of ₹8,841, GST of ₹1,591 and an assumed ₹299 fee with ₹54 GST come to ₹10,785, under half the cost above. If each bill, EMI included, is paid in full, new purchases keep their interest-free days.

Cash you already hold costs less: banks typically cut 0.5 to 1 percentage point (2026) from the rate for the time the deposit has run. On a ₹2,00,000 FD that has run a year, that is about ₹1,000 to ₹2,000, more if it was booked for a longer term at a higher rate. A hospital deposit is the kind of bill an emergency fund is for. A personal loan costs about 10% to 24% a year (2026), depending on the lender and your credit score; a personal loan vs a loan on your credit card compares the two.

What if you miss even the minimum?

A card-issuer may report the account as past due to credit bureaus, and charge a late fee, only once it is more than three days past the due date; had Deepak paid nothing by day 30, that point would be day 34. The late fee may be charged only on the amount still outstanding after the due date, not the whole bill, and carries 18% GST. Issuers set their own late fees, rising with the amount owed: in 2026 from nil on the smallest dues to about ₹1,300, the top slab a bill of Deepak's size would pay.

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Frequently asked questions

Paying at least the minimum by the due date keeps the account from being past due, so it is not reported as a missed payment. The balance you carry still counts: ₹1,90,000 owed on a ₹6 lakh limit uses about 32% of it, and how much of your limit you use is one of the factors credit scores take into account.
Each card-issuer sets its own formula, often 5% of the outstanding in 2026, plus any EMIs due, fees and overdue amounts, and the statement shows it. Under RBI's rules it must at least cover the interest, GST and charges on the bill, so paying it stops the amount you spent from growing.
Only after the whole outstanding is paid, because RBI's directions say the interest-free credit period is suspended while any balance of the previous month's bill is unpaid. The card's terms say whether it returns from the next purchase or the next billing cycle, so check them before you start spending on the card again.

This is general information for salaried individuals in India, not personalised financial advice.