IDFC First and Axis Bank Update Minimum Payments
Effective September 1, 2024, IDFC First Bank is lowering the minimum amount due on credit cards from 5% to 2% of the principal payable. Axis Bank made a similar reduction last November. This change aims to make payment behavior more lenient and frequent by requiring a lower minimum payment.
Potential Impact of Lower Minimum Payments
- Easier Payments: Reduced minimum payments can make it easier for customers to meet their payment obligations.
- Interest Accumulation: Paying only the minimum amount can result in the accumulation of the total outstanding balance, leading to higher interest charges.
Concerns from Other Banks
- RBL Bank & Federal Bank: Senior executives from RBL Bank and Federal Bank have stated they have no immediate plans to lower the minimum amount due.
- Risk Assessment: Federal Bank noted that reducing the minimum payment could increase risk due to higher chances of accumulating debt and potential default.
Understanding Minimum Amount Due
- The minimum amount due is the smallest amount you need to repay to keep your account in good standing and avoid late fees. It’s typically a percentage of the total amount due for the billing cycle.