New credit card users often find themselves confused about the concepts of Minimum Outstanding and Total Outstanding. Although these are relatively simple matters, we are addressing this topic upon the request of our valued readers to help clarify the confusion.
What is Total Outstanding?
Total Outstanding refers to the total amount generated at the end of a billing cycle for all the transactions made using your credit card. This includes cash withdrawals from ATMs, purchases made via e-commerce or POS terminals, bill payments, EMI installments, and all other card-related expenses.
Depending on the issuing bank and the card type, this total outstanding amount must be paid within 15 to 20 days of the bill generation date. If the full Total Outstanding is paid within this due period, no interest is charged on the account.
Please note: Paying the Total Due amount mentioned in your statement may not always clear all outstanding balances on your credit card. This is because the Total Due reflects the charges accumulated during the last billing cycle only. Any additional transactions or charges such as interest, fees, or purchases made after the statement was generated may still remain unpaid. However, once the Total Due is paid in full, no further interest will be charged on that billed amount.
What is Minimum Outstanding?
As explained above, the Total Outstanding is the full amount payable. However, when a cardholder is unable to pay the full amount, they can keep the card active by paying the Minimum Outstanding, which is typically 5% of the total due or a fixed small amount determined by the bank’s policy. Paying the minimum amount on or before the due date ensures that the cardholder’s credit score remains unaffected.
It is important to note that EMI installments usually cannot be settled through minimum due payments—they must be paid in full. Also, while paying the minimum due keeps the card active, interest charges will start accruing on the remaining balance from the payment due date, based on the bank's standard interest rates.
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