What this tool does
Paying the minimum on a credit card is the most expensive way to clear a balance, because the payment barely exceeds the interest charged on the balance you still owe. Most published calculators also leave out the 18% GST that applies to that interest, which understates the cost badly. This tool simulates the balance month by month, includes the GST, and runs the same balance as a fixed payment so the difference is measured rather than argued.
How it works
Interest is charged monthly on the reducing balance, not on what you originally spent. A 24% annual rate is 2% a month, applied to whatever is still outstanding at the start of the statement period. Each month the interest is added to the balance and your payment is then subtracted, so the balance only falls by the amount of the payment that exceeds that month's interest. When the payment does not exceed the interest, the balance does not fall at all, and paying the minimum on a high-rate card is precisely that situation.
The line most calculators leave out is the GST. Under the GST law, interest on a credit card balance unpaid by the due date is a taxable supply, so 18% GST applies on top of the interest itself. A 24% card is therefore closer to a 28.3% card once GST is included, and the same compounding applies to that larger charge. GST is also charged on annual fees, cash withdrawals and forex markup, though not on a purchase you pay in full by the due date.
The minimum due is set by RBI rules, which ask for the higher of two amounts: about 5% of the total statement amount, or the interest due plus 1% of the principal outstanding. On a 1,50,000 balance at 24% those two are 7,500 and 4,500, so the 5% limb applies. Paying 7,500 clears that month's charge of 3,960 and puts only 3,540 into principal, which is a slow bleed rather than a repayment. The tool uses the percentage minimum, so raise it to the higher figure if your statement does.
A fixed monthly payment changes the picture completely, and the difference is where the cost actually sits. The tool runs the identical balance twice, once at the minimum and once at a chosen fixed amount, and reports the months saved and the interest saved. Interest on revolving balances is the most expensive retail borrowing in India, so the fastest route out is a payment comfortably above the interest, a balance transfer or a lower-rate card rather than a new loan, and paying the full statement every month costs nothing at all.
Worked example
A balance of 1,50,000 on a card charging 24% a year, paying only the 5% minimum, compared with a fixed 15,000 a month.
- Monthly rate = 24 / 12 = 2% on the reducing balance
- Month one interest = 1,50,000 × 2% = 3,000; GST at 18% = 540; total charge = 3,540
- Minimum due = 5% of 1,50,000 = 7,500, so only 7,500 - 3,540 = 3,540 reaches principal
- At that rate the balance needs about 448 monthly payments to clear
- At a fixed 15,000 a month the same balance clears in about 12 months, with roughly 23,148 of interest
Paying only the minimum takes about 448 months, which is 37 years, and costs roughly 1,34,090 in interest and GST on a 1,50,000 balance. Paying a fixed 15,000 a month clears it in about 12 months and saves roughly 1,10,942.
Accuracy and limitations
- The simulation assumes the rate, the payment and the balance stay as entered, with no new spending added. Issuers round the minimum due, apply the higher of the statement-total and interest-plus-1% tests, and can change the rate or the terms at any time, so your statement is the authority on both numbers.
- The 18% GST applies to interest on revolving balances and to charges such as annual fees, cash withdrawals and forex fees. It is not charged on a purchase paid in full by the due date, so a full-payer pays no interest and no GST.
- This is arithmetic, not advice. Carrying revolving card interest is expensive enough that clearing it usually beats investing the same money, but borrowing to invest is a decision with a different risk profile entirely.
Frequently asked questions
- How long does it take to pay off a credit card paying only the minimum?
- On a 1,50,000 balance at 24% a year, about 448 months, which is 37 years, with roughly 1,34,090 of interest and GST along the way. The minimum is set as a percentage of the balance, so it shrinks as the balance shrinks and the only genuinely faster route is a fixed payment well above the interest.
- Why is 18% GST charged on credit card interest?
- Interest on a credit card balance unpaid by the due date is treated as a taxable supply under the GST law, so 18% GST applies on top of the interest. A 24% card is effectively about a 28.3% card once the GST is included. Most online calculators quote interest only and quietly leave this line out.
- How is the minimum due on a credit card worked out?
- It is the higher of two figures, set by RBI rules: about 5% of the total statement amount, or the interest due plus 1% of the principal outstanding. On a 1,50,000 balance at 24% those are 7,500 and 4,500, so the 5% limb wins. Always pay more than the printed minimum, because it is a damage-limitation figure, not a repayment plan.
- Is interest charged on the full amount I spent on the card?
- No, only on the unpaid balance, and that is what makes full payment worthwhile. Interest accrues from the transaction date on any amount you have not cleared by the due date, then GST is added to that interest. A purchase paid in full by the due date costs nothing.
- What is the fastest way out of revolving card debt?
- Set a fixed payment that is comfortably more than the monthly interest, and if you carry more than one balance clear the one with the highest rate first. A balance transfer to a lower-rate card or a small personal loan at a much lower rate also cuts the cost sharply, provided you stop adding new spending to the old card.
- Is my card balance or rate sent anywhere?
- No. The simulation runs entirely in your browser, and nothing you enter is transmitted, stored or logged. The page is a static export with no server component of its own.