Does Paying the Minimum Due Amount in Credit Card Affect Credit Score ?

Does Paying the Minimum Due Amount in Credit Card Affect Credit Score ?

28 May, 2024

Synopsis

  • Your Credit Score is a 3-digit figure representing your creditworthiness.

  • Ranging from 300-900 points, it increases or decreases based on how you handle credit.

  • Not repaying your entire Credit Card dues or merely paying the minimum amount due impacts your credit score.

Credit Cards have become an essential financial accessory today. You can use them to shop for daily necessities, and fund almost every other expense using Credit Cards. Along with the convenience of Credit Cards comes the responsibility of managing them wisely. You must ensure you use the card prudently and pay off your outstanding debts on time. While Credit Card providers allow you to pay only the minimum amount due on your bills, you must assess whether that’s in your favour. If you’re wondering, does minimum payment affect credit score, this article is for you. With Payzapp from HDFC Bank, you can even plan out your credit card bill payments while maintaining or even improving your credit score.

Does Paying Minimum Due Affect Credit Score?


The minimum due on a Credit Card statement is the minimum amount that you the cardholder needs to pay by the due date to avoid late payment charges. While paying the ‘minimum due’ might seem like a convenient option during financial constraints, the question “does paying minimum affect credit score” cross your mind, especially if you intend to make it a habit to pay only the minimum amount due. The answer to this question, is yes, it does. Paying barely the minimum amount due can have long-term repercussions on your credit health.

Decoding Credit Score


Your credit score is a 3-digit numeric representation of your creditworthiness ranging from (300-900 points), that gives you, your creditors and lenders insight into your credit handling behaviour. It considers factors such as timely payments, credit utilisation ratio, length of credit history, and types of credit accounts. Missing or making late payments, including paying only the minimum due, can adversely affect your credit score.

What Paying Minimum Amount Due Says to Creditors About You


Paying only the minimum due on your Credit Card bill indicates to lenders that you may be struggling to manage your finances or that you are heavily reliant on credit. This can be an indicator to potential lenders that you may not be able to pay your bills easily, and may also negatively impact your creditworthiness. Additionally, carrying forward balances by paying the minimum due incurs high-interest charges, leading to a debt trap that becomes increasingly difficult to escape.

The Snowball Effect of Minimum Payments


If you consistently pay only the minimum due, you will end up carrying forward a significant portion of your balance each month, accruing more interest over time. This phenomenon is commonly referred to as the ‘snowball effect,’ where your debt grows rapidly, making it harder to pay off.

From a lender’s perspective, seeing a pattern of minimum payments can indicate financial instability and an inability to manage debt responsibly. Consequently, this can lead to a decline in your credit score, making it challenging to access favourable credit terms in the future.

The Role of PayZapp in Managing Credit Card Payments

PayZapp offers a convenient platform for making a wide range of payments, including Credit Card bills. By leveraging the features of PayZapp, you can effectively manage your Credit Card payments and avoid the pitfalls associated with paying only the minimum due.

A key benefit of using PayZapp is its real-time payment functionality. You can set up automatic Credit Card bill payments and ensure you never miss a due date. By automating payments, you can avoid late payment charges and maintain a positive payment history, which helps preserve your credit score.

Additionally, PayZapp offers personalised insights and recommendations to help you better manage your finances. Through features like spending analysis and budgeting tools, you can gain a deeper understanding of your financial habits and make informed decisions to improve your credit health.

How To Pay Your Credit Card Bill Via PayZapp

Follow the steps mentioned below to pay your Credit Card dues on time:

  1. Login to PayZapp Online Payment App with your finger or thumb impression.

  2. Click on ‘Accounts & Cards’ and click on the ‘Cards’ tab.

  3. Click on the ‘Add new’ tab to add a Credit Card to PayZapp.

  4. Enter your card details and click on proceed.

  5. Your card is now successfully added to PayZapp.

  6. Now proceed to ‘Bills & Recharges’, go to ‘Financial Services,’ and select ‘Credit Card.’

  7. Your Credit Card will be visible at the top of the list with the ‘Clear Dues’ tab next to it.

You have the option to set up recurring payments to avoid late payment charges on your Credit Cards.

Click here to make credit card bill payment through PayZapp on your IOS phone.

Click here to download PayZapp for Credit card bill payment on your Android phone.

Make Timely Credit Card Bill Payments with PayZapp

While paying the minimum due on your Credit Card may provide temporary relief, Credit Card minimum payments affect Credit score and your overall financial well-being in the long run. Its snowballing effect of carrying forward balances can cause you to fall into a debt trap. By choosing PayZapp to pay your credit card bills on time, you can ensure your credit score always remains high.

Keep your Credit score optimal by making timely Credit Card payments. Download PayZapp today!

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.

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