Several credit card users often find themselves in a situation in which they don’t have enough money to pay the full credit card due. In such a situation, they make a partial credit card payment, generally by paying the minimum amount due to avoid penalties.

However, a question is always there in minds of card users: Can the card-issuer charge interest or late payment fees on the total amount due in case the cardholder has made only partial payment?

In the above situation, the RBI recently said that the cardholder will lose interest-free credit period. Further, the credit card issuer may levy an interest from the date of transaction on the outstanding amount.

However, late payment fee and other charges related to delay can be levied on the outstanding amount only after the payment due date. These charges cannot be levied on the total amount due.

Also Read: Credit card billing cycle rule changed by RBI. Know how it helps cardholders

What RBI said

“In case a cardholder does not clear the total amount due within the payment due date, interest free credit period will be lost, and interest may be levied from the date of transaction on the outstanding amount (adjusted for payments/refunds/reversed transactions as and when credited) and not on the total amount due,” the RBI says.

“Further, late payment fee and other charges relating to delay in payment shall be levied only on the outstanding amount (adjusted for payments/refunds/reversed transactions as and when credited) after the payment due date and not on the total amount due,” it adds.

The above rule has come into effect with the notification of amended ‘Master Direction‘ for credit and debit card issuers on March 7, 2024.

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