The State Bank of India (SBI) Card arm has introduced a major deviation in calculating the Minimum Amount Due (MAD) on your credit card bill. Applicable from july 15, 2025, this development is said to affect millions of Sbi credit card holders in the country.
It’s important for cardholders to know about this change so that they can stay on top of their finances, save themselves from needless fees and remain in good standing with credit bureaus.
What does ‘Minimum Amount Due’ (MAD) mean?
The Minimum Amount Due (MAD) is the minimum payment the credit card owner is required to pay before the due date to remain in good standing. Making the MAD ensures that you aren’t immediately penalised, as well as ensuring that the account won’t be listed as overdue.
But paying the MAD only, does not prevent the rest of the balance from accruing interest. The unpaid balance is still subject to finance charges until the entire balance is paid in full.
The Old MAD Calculation Method
Earlier, the MAD for SBI credit cards was compiled after compounding multiple charges. The calculation incorporated aggregate Goods and services Tax (GST), EMI amount, 100% of fees and charges, 5% of the sum of the finance charges, retail spends and cash withdrawal.
In such case, the MAD would be the addition of total GST, EMI amount, overlimit amount, 100% of fees/ charges, and 100% of finance charge. 5 If 5% of (finance icharge + retail spends + cash advance) is less than the finance i charge itself, the MAD would be 5 totalGST + Any overlimit amount + EMI amount + 100% of fees/charges + 100% finance charges.
This approach often produced a somewhat lower MAD particularly for revolvers. Although this was a temporary solution, it also meant that charges and fees could have potentially been adding to the debt, and increasing the debt overall.
The New MAD Formula: What Is Different?
Effective July 15, 2025, SBI Cards shall have a revised MAD formula. The new formula is aimed at bringing more transparency and faster return of funds owed. The revised MAD will thus be:
- 100% of GST
- 100% of EMI amount
- 100% of fees and charges
- 100% of finance charges
- A any overlimit amount (if applicable)
- 2 %of the rest of the unpaid balance
This means that all charges, fees and taxes must be fully paid by the end of each month, plus an additional 2% to the outstanding balance that has not been paid.
The upshot is a higher minimum payment for most cardholders, and especially for those who carry large balances from one month to the next.
Why SBI Cards Altered the MAD Formula
There are multiple reasons why this change is made. For one, it’s trying to make billing more transparent by breaking out everything you have to pay each month. That way, the bank and the cardholder know exactly how much is due, for what.
Second, the new formula is intended to preclude the compounding of unpaid finance charges. Getting in the habit of paying 100% of charges and fees every month helps reduce the risk of carrying interest on unpaid balances.
This change will help foster good repayment behavior and prevent cardholders from getting into debt.
Third, the new MAD design is meant to reinforce responsible use of credit. With the new card, SBI Cards aims to prompt cardholders to repay more of their dues at a faster pace and in doing so, achieve better credit health over a period of time.
Effect on Credit Card Account Holders
The first apparent effect of the new MAD formula will be higher minimum payments each month. For instance, with the previous calculation, if a cardholder’s retail purchase balance was ₹1,34,999.60, finance charges were ₹11,972.18, fees and charges were ₹2,700, GST was ₹2,640.99, MAD was ₹17,313.17. Under the new formula, the MAD for the same statement would increase to ₹20,013.16.
This growing sum means that credit card holders will have to put more money aside each month in order to avoid these penalties, and keep their accounts in good standing.
Though this will create some temporary strain for some, it does also speed up the rate at which debts are paid off and prevent charges from racking up ad infinitum.
Payment Settlement Order: A New Sequence
In addition to the modified MAD formula,SBICards is changing the order of payment settlement. The payments against overdue amount shall henceforth be adjusted in order as under:
- GST
- EMI amount
- Fees and charges
- Finance charges
- Balance transfer amounts
- Retail spends
- Cash advances
Thanks to this method, the biggest liabilities (e.g., taxes, EMIs, fees) are paid off first, which further minimizes the chances for more penalties or interest.
Advantages of the New MAD Formula
There are multiple benefits to both the cardholder and the bank with the new MAD formula. And forced to pay all charges, fees, and taxes can be instrumental in preventing the accumulation of arrears.
This not only saves the financial consumer from spiraling into a debt trap but also strengthens the credit discipline across the system.
For cardholders who carry over a balance, the new arrangement makes the cardmembers’ responsibilities clearer.
It removes uncertainty for them and makes planning to repay more efficient. This can translate into better credit scores and more financial stability over time.
Limitations and Proxy Measurement Issues
Although the new MAD calculation is meant to encourage better repayment behaviour, it could be difficult to manage for cardholders in tight liquidity position.
The increased minimum payment can put pressure on monthly budgets, particularly for those with more than one financial obligation.
In order to address such challenges, cardholders are suggested to spend wisely by examining their spending behavior, focus on their basic spending needs and not indulge in anything that’s not necessary when they are spending on their credit cards.
In fact it doesn’t hurt to pay a little over the MAD, if at all you can, since this will bring down the interest burden and help you clear the dues in double quick time.
Long-Term Implications
On balance, the new MAD formula has a lot of positive in the long run. It promotes positive credit profiles and lowers default risks by promoting prompt and sufficient repayments.
Customers who never pay below the MAD will have reduced interest rates and better credit ratings.
But it’s worth noting that by paying just the MAD — even under the new formula — a cardholder is not going to become debt-free in no time at all.
So even paying only the minimums, Howser said, it could still take years to completely pay down the debt, depending on the balance. Thus, aiming to pay as much as they can above the MAD should help cardholders escape the treadmill of debt quicker.
What It Means for SBI Credit Card Holders
SBI Cards’ new MAD formula is a big change in how credit card bills are going to be billed and repayed. Cardholders may want to do the following to adjust to the new regime:
- Always check off your monthly statements and learn the new MAD calculation.
- Rejig personal budgets to support the increased minimum payment.
- Pay your old dues first to avoid the piling of interest and penalties.
- Avoid making non-essential purchases on credit cards, particularly when carrying balances forward.
- Think about arranging automatic payments to make sure your dues are paid on time.
Conclusion
A new MAD calculation by SBI Cards will encourage financial discipline and transparency. If anything, by raising the minimum rate, it delivers more transparency to cardholders for what they have to do as well as opens the way for less likely to go into spiraling levels of card debt.
By being well informed and adapting your repayment strategy, SBI credit card holders are going to be able to get through these changes and keep their finances in good shape. The trick is to use credit responsibly, pay on time, and try to pay down balances as soon as you can.