Why Paying Only the Minimum on Credit Cards Is Like Drinking Poison Slowly

Credit cards are powerful financial tools. They offer convenience, rewards, cashback, and even emergency liquidity. But they also come with a catch: the minimum payment option. On the surface, paying only the “minimum due” every month looks like a safety net. It keeps your account “active,” avoids immediate penalties, and buys you time. But beneath this apparent relief lies a dangerous trap — one that can quietly drag you into years of debt, crush your credit score, and cost you lakhs in interest.

Let’s break down why paying only the minimum on your credit card is like drinking poison slowly.

What Does “Minimum Payment” Really Mean?

When you look at your credit card statement, you usually see three key figures:

• Total Outstanding – the full amount you owe for that billing cycle.
• Minimum Due – a small percentage of your outstanding (usually 5%) or a fixed amount.
• Payment Due Date – the last date to make a payment before penalties apply.

The minimum due is designed to ensure you don’t default outright. For example, if your total outstanding is ₹50,000, your minimum due might be just ₹2,500. Paying this keeps your account technically in good standing — no late payment fees, no immediate default.

But here’s the catch: the bank will now charge interest (36–42% annually in India) on the remaining ₹47,500. That’s how credit card companies make money — by trapping you in a cycle where debt compounds every month.

The Debt Snowball Effect

Credit card interest is one of the highest in the financial system. Unlike loans, where interest is simple and structured, credit cards use daily compounding. That means every day you don’t pay, your outstanding grows.

Let’s illustrate with an example:

• Outstanding balance: ₹1,00,000
• Minimum due: ₹5,000
• Interest rate: 3% per month (36% annually)

If you pay only ₹5,000, the remaining ₹95,000 incurs interest. Next month, interest of around ₹2,850 is added, making your debt ₹97,850 (even after paying ₹5,000!). Over time, the balance grows so much that your payments barely cover the interest, leaving the principal untouched.

This is why many people end up paying back two to three times their original debt before clearing their credit cards.

How Minimum Payments Kill Your Credit Score

Most people assume paying the minimum keeps their credit score safe since they aren’t technically defaulting. This is half-true. While minimum payments avoid “late payment” tags, they still harm your financial health in multiple ways:

1. High Credit Utilisation – If your card balance remains high month after month, your credit utilisation ratio (balance vs. limit) shoots up. Ideally, you should stay under 30%. Above 50%, your credit score takes a hit.
2. Interest Accumulation – Since you’re not reducing the principal, your outstanding remains nearly constant, making you look like a “high-risk borrower.”
3. Future Loan Rejections – Lenders reviewing your credit report will see you’re revolving balances and may treat you as financially stressed, even if you’re paying on time.

So, while you may escape penalties today, you quietly destroy your creditworthiness for tomorrow.

The Psychological Trap of Minimum Payments

Banks know human behaviour very well. By offering a “low” minimum due, they trick your brain into thinking:

• “₹5,000 is manageable.”
• “At least I’m not defaulting.”
• “I’ll pay more next month.”

But next month, the same logic repeats. Slowly, you normalize carrying debt as part of life. Before you realize, years have gone by, and your credit card has silently become a financial chain around your neck.

When Minimum Payments Make Sense (Rarely)

There are only a few situations where making just the minimum due is defensible:

• Temporary Cash Flow Issue – If you’re waiting for your salary or some funds in the next few days and just want to avoid late fees.
• Emergency – If paying the full amount isn’t possible due to medical or sudden expenses, paying the minimum keeps you afloat temporarily.

But even then, it should be a one-time event, not a habit. The moment you can, you must clear the outstanding in full.

How Much Can Minimum Payments Really Cost You?

Let’s assume:

• Credit card balance: ₹1,00,000
• Minimum payment: 5% (₹5,000)
• Interest rate: 36% annually

If you only pay the minimum every month:

• It could take you over 5–7 years to clear the debt.
• Total repayment amount: nearly ₹2.5–3 lakhs for an original ₹1 lakh balance.

This is the real cost of “buying time.” You’re giving the bank your future income in exchange for temporary relief today.

Alternatives to Minimum Payments

If you ever find yourself unable to pay your full credit card bill, here are smarter options:

1. Convert to EMI – Most banks allow you to convert big purchases into structured EMIs at lower interest rates (15–18% annually vs. 36%). This can save you money.
2. Personal Loan for Repayment – A personal loan at 12–18% interest is far cheaper than revolving card debt at 36–42%.
3. Balance Transfer – Move your outstanding to another credit card offering a 0% or low-interest transfer for a limited time.
4. Negotiate with Bank – If you’re genuinely struggling, reach out to your bank. They sometimes offer settlement or restructuring plans (though this may impact your score).

The key is to avoid carrying forward your balance indefinitely.

How to Break Free If You’re Already Stuck

If you’ve already been paying only the minimum and your debt looks unmanageable, don’t panic. Here’s a recovery plan:

• Stop Using the Card – First, stop adding more fuel to the fire. Cut discretionary expenses.
• Target One Card First – If you have multiple cards, use the snowball method (pay off the smallest card) or avalanche method (target the highest interest card).
• Increase Payments Gradually – Even paying double the minimum (10% instead of 5%) can drastically reduce your debt timeline.
• Seek Professional Help – Debt counselling agencies and platforms like GoodScore (in India) can guide you with repayment strategies.

The Long-Term Dangers Nobody Tells You

Many cardholders believe that as long as they don’t “default,” everything is fine. But here’s what minimum payment culture does in the long run:

• You get trapped in a cycle of perpetual debt.
• Your credit score quietly suffers.
• Your ability to get affordable loans (home loan, car loan, business loan) reduces drastically.
• You end up paying interest that could have been used for investments, savings, or life goals.

In other words, minimum payments rob you not just financially, but also emotionally — keeping you stressed and dependent on future income.

The Bottom Line

Paying only the minimum due on your credit card is not a solution. It’s a trap. It offers temporary relief but creates long-term damage. Think of it like drinking poison slowly — it won’t kill you immediately, but over time, it weakens your financial health, erodes your creditworthiness, and costs you lakhs.

If you truly want to use credit cards wisely, follow this golden rule:

Always pay your full outstanding balance every month.

If you can’t, restructure, convert to EMI, or take a personal loan — but never fall into the comfort of minimum payments.

Because in the world of credit, survival isn’t about just “avoiding default.” It’s about staying financially healthy enough to thrive in the future.