User claims ₹1,200 credit-card charge after 46-paise shortfall; bank responds, here’s what RBI rules say

A social media post, now deleted, sparked a debate over credit-card late-payment charges after an X user claimed that he was charged more than ₹1,200 by HDFC Bank after falling short of his ₹10,649.46 bill by just 46 paise. The user said he had paid ₹10,649 against the bill, leaving ₹0.46 unpaid.

The post questioned how such a small shortfall could result in more than ₹1,200 in late-payment and related charges. The episode also raised questions about how credit-card issuers calculate charges when the total amount due is not paid in full.

HDFC Bank has since clarified the matter to Mint, saying the customer's payment in this instance was received after the stipulated grace period had lapsed. The bank said the charges were applied as per the applicable card terms and conditions and were subsequently reversed as a one-time goodwill gesture.

HDFC Bank responds

In a statement issued to Mint, HDFC Bank said credit-card late-payment and related charges are applied only when neither the total amount due nor the minimum amount due is paid within the stipulated due date and the subsequent grace period.

The bank said that in this instance, the customer's payment was received after the grace period had lapsed and the charges were therefore applied in accordance with the applicable card terms and conditions.

HDFC Bank added that it has reversed the charges as a one-time goodwill gesture and remains in touch with the customer for any further clarification.

What does RBI say about credit-card payments?

The Reserve Bank of India (RBI) says that if a cardholder does not clear the total amount due by the payment due date, the interest-free credit period is lost. Interest may then be charged from the transaction date on the outstanding amount, after adjusting for payments, refunds and reversed transactions. RBI specifically clarifies that interest cannot be charged on the total amount due.

Late-payment charges are treated separately. RBI says card issuers can report an account as “past due” or levy penal charges such as late-payment fees only when the account remains past due for more than three days. Such charges must be levied only on the outstanding amount after the due date, and not on the total amount due.

RBI also requires card issuers to specify in the billing statement the level of unpaid amount, beyond the minimum amount due, at which the interest-free credit period will no longer be available. This is important because the total amount due, minimum amount due and outstanding amount are not interchangeable terms.

What happens when only a small amount remains unpaid?

A small shortfall does not necessarily mean that the customer will automatically incur interest or a late-payment fee. The treatment of minor payment differences can depend on the card issuer's own terms and any threshold it applies.

Aditya Gupta, founder and CEO of novio, said credit-card systems generally account for very small payment differences. A few paise, or even a few rupees, left unpaid is generally not treated as a conventional partial payment and would typically not attract interest or additional charges, he said.

“A small unpaid amount does not necessarily mean that the payment is treated as a partial payment,” Gupta said. However, he added that the exact threshold can vary across card issuers.

This distinction is important because finance charges and late-payment fees are not the same thing. Finance charges relate to the cost of carrying an outstanding balance, while a late-payment fee is a separate penal charge that can apply when the account meets the conditions prescribed by the issuer and RBI.

For credit-card users, the amount appearing as a charge on the next statement therefore needs to be read along with its breakup. The applicable interest, late-payment fee and taxes are separate components and are governed by the card issuer's disclosed terms and RBI's rules.