Reading your Credit Card Statement

A credit card statement or a credit card bill usually shows the elements listed below:

A snapshot of your credit card number (a 16-digit number that can begin with ‘4’ or ‘5’), the statement date, the date on which your payment is due, the total amount due and the minimum amount due.

Your account summary. This contains detailed information about the purchases you made before your bill was prepared; that is, the statement date.

You will also find various other items like your balance payment you have to make from the previous month, the payment you made on your last bill, interest charges applied on the payment you owe your credit card provider (if any), late payment charges (if any), service tax and cash advances (if any).

The bill also contains your credit summary. This summary mentions details such as your total credit limit, available credit limit, cash limit and available cash limit on your account.

Available cash limit = Total cash limit – Cash amount withdrawn.

Let us now look at each of these terms so that you can navigate easily

credit card statement reading

 through your next credit card bill statement.

Statement date

A credit card statement is a monthly summary of your credit card usage. It has a billing cycle of one month; all funds spent or credited in this period make up the statement. It is generated at the end of the billing cycle, a date that is called the statement date. Any amount spent after the statement date becomes part of the next billing cycle and is shown in the next statement.

Payment due date: The most important element in your credit card is the payment due date. If you don’t pay your credit card bills on the due date, you will have to pay an interest on the balance amount in your credit card. You will also have to pay a late payment fee. Credit cards usually come with a 45-days interest free period. This means, if you pay on time, you don’t have to pay any interest on your credit card spends. But after this limit, if you don’t repay then you will have to pay an interest that can range between 22% and 44% per annum.

Minimum amount due: Credit card companies give you an option to pay a minimum due amount. If you pay only this minimum amount, you will not be charged a late payment fee. This is the least understood part of a credit card statement. The minimum amount due is a percentage of the total amount due. Generally, it is 5 percent of the total amount due as calculated on the statement date. If card members have an EMI running on their credit card, the EMI amount gets added to arrive at the minimum amount due. It helps you keep your credit card account in order and avoid default, but entails a lot of charges. So, unless unavoidable, you should refrain from using this option. It makes better sense to convert your dues into EMIs if you find one-time payment difficult. The late payment fee is usually a flat fee of between Rs100 and Rs1,000 and depends on the amount and your credit card provider. However, you will still have to pay interest on the balance amount in your card.

Limits: There are three kinds of limits mentioned on your credit card statement: credit limit, available credit limit, and available cash limit. A credit limit is always higher than your cash limit. A credit limit is an amount you can use by swiping your card, while cash limit is the amount you can withdraw from an ATM. While you get an interest-free period for credit card spends, the interest on cash withdrawals kicks in immediately.

Account summary: The account summary gives you a break-up of your opening balance, when the billing cycle started, the last payment you made, the amount you spent in that billing cycle and any previous financing charges. It also gives you details of your past dues of even over 3 months.

Important information: This section tells you about things such as a change in interest rates, change in the rate of tax or any revision in the features of your credit card. Read this section carefully to ensure that you use your credit card accordingly.

Transaction description: This section of your credit card statement will give you details of all the transactions during the billing cycling including date and place of transaction, and its amount. In case of a discrepancy, alert the bank immediately. These are date-wise details of all transactions in a given billing cycle. Amounts spent are shown as debit entries. These include any surcharges, penalties, and taxes. Payments to the credit card show up as credit (cr). As do reversed transactions, or any cancellation and refund.

Reward points: Many credit cards offer benefits such as rewards for using your credit card. The reward points table gives you details of how many points you have collected so far, how many reward points you earned in the billing month, lapsed point and the total points.

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