A credit card is interest-free only if you pay the full amount due by the due date. If you carry a balance, interest is charged on it, and new purchases usually stop being interest-free until the balance is cleared.
Last reviewed on 19 October 2026.
How card interest generally works
- Pay the total amount due by the due date: no interest on purchases.
- Pay less than the total: interest is charged on the outstanding amount, often from the date of each transaction, and the interest-free period for new purchases is suspended.
- Cash withdrawals usually carry interest from the day of withdrawal, plus a fee.
- GST is charged on interest and fees.
The minimum amount due
Paying at least the minimum amount due by the due date keeps the account from being treated as past due, but interest is charged on everything you do not pay. Paying only the minimum every month stretches repayment over many months and adds compounded interest. Your statement must carry a warning saying so.
What the RBI rules say
- The minimum amount due must be set so that the balance does not grow (no negative amortisation), and unpaid charges, levies and taxes are not added to the amount on which interest is charged. [1]
- Interest may be charged only on the outstanding amount, after adjusting for payments, refunds and reversed transactions. [1]
- Billing statements must prominently warn that paying only the minimum amount due every month makes repayment stretch over months, with compounded interest. [1]
- You must have at least a fortnight after the statement to pay before interest starts, and you may change your billing cycle at least once. [1]
- A card account is reported to credit information companies as past due, or charged late-payment fees, only if it stays past due for more than three days after the due date, and you must be told before a default is reported. [1]
- A request to close a card must be completed within seven working days once dues are paid; if the issuer is late, it owes ₹500 for each day of delay. [1]
Rules referred to
- RBI Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022 (updated to 7 March 2024) (opens in a new tab) (RBI/2022-23/92, 21 April 2022)
Minimum amount due without negative amortisation, interest only on the outstanding amount, reporting to credit information companies, closure of cards, billing cycle.
Finobazaar read these rules on rbi.org.in on 19 October 2026. Rules change: check the current text on the RBI website.
Important limitations
- How interest is computed differs between card issuers; your statement and card terms are the record.
- This guide is general information. It does not promise any change in your credit score, an approval or a particular result.
Official resources
- RBI Complaint Management System (RBI Ombudsman) (opens in a new tab)File a free complaint against a bank, NBFC or credit information company that has not resolved your complaint.Complain to the company first; if there is no reply within 30 days or you are not satisfied, file within 90 days after that. Contact centre: 14448. Email: crpc@rbi.org.in.
- RBI – FAQs on the Integrated Ombudsman Scheme, 2026 (opens in a new tab)Who is covered, when and how to complain, and what the Ombudsman can award.
Addresses checked on 19 October 2026.
Related
- Credit card repayment and interest calculatorSee how long a card balance takes to clear and the interest it costs, compared with paying only the minimum amount due.
- Credit utilisation calculatorSee what share of your credit card limits you are using, and how much credit is still available.
- Responsible borrowing checklistPoints to think through before taking on new credit.
- Building and improving your credit profileHabits that generally support a healthy credit profile, what to avoid, and why there is no fixed timeline or number of points.
- Managing debt: repayment order, consolidation and your debt-to-income ratioListing your debts, the snowball and avalanche orders, when consolidation may help, and when to talk to your lender.