IDFC First Bank has announced changes to its credit card terms including the Minimum Amount Due (MAD) and payment due date. These changes will be done to adjust the cardholder obligations. The new updates will come into effect from September 2024. IDFC Bank has decided to reduce the minimum amount due (MAD) on credit card payments. The new minimum amount due rates have been reduced from 5 percent to 2 percent of the principal amount payable. The reduced MAD will lower the minimum amount users need to pay each month. It can provide them relief for a short time.
There are two amounts written on the credit card statement. One is the bill of your credit card for the whole month, while the other is the minimum amount due. Let us tell you that the minimum amount due is a very small part of your bill, which is only about 5 percent. It is worth noting here that if you pay the minimum amount due, then you will not be charged late fees. You have to pay a hefty charge on the bill. A reason for the reduction in MAD is to make the customer’s payment more frequent as they would have to pay less amount. It should also be noted that paying only the minimum amount due can lead to the accumulation of the total outstanding amount on which interest is charged. This could lead to higher interest charged to the customer. It is also done to reduce the higher pressure on the larger credit card portfolio of the bank.
The IDFC First Bank has decided to reduce the payment due date from 18 days to 15 days from the date of statement generation. The card users will have three fewer days to make their payments. This new move aims for the cardholders to pay attention to the payment statement to ensure it is done on time and avoid late fees.
Reduction in minimum amount was first practised by Axis Bank followed by IDFC First Bank. Many banks have decided to not follow this trend as they feel there is a high risk in such plans.
