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How to Understand a Credit Card Statement?

Updated on: 14 Dec 2021 // 28 min read // Credit Cards
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Credit Cards are amongst the most popular financial products in this day and age. With various benefits they offer, it is no surprise that the Credit Card customer base is rising rapidly in the last few years.

Some of the significant benefits that Credit Cards offer include an interest-free repayment period, ease in making online transactions, making purchases in foreign currency, availing instant loans, converting the cost of purchase into easy EMIs and much more. That being said, in order to maximize the benefits you can avail from your Credit Card, you must exercise financial discipline.

With the high APR that Credit Cards come with, it is easy to fall into a debt trap if you fail to manage your card bills. One of the major aspects of avoiding any such instance is to understand your Credit Card Statement properly.

About Credit Card Statements

Credit Card statement is the monthly transactional summary that you receive from your card issuer at the end of card statement cycle each month. It includes all the information and details pertaining to your Credit Card transactions. The elaborate details which are included in a Credit Card statement allow you to understand your Credit Card usage patterns perfectly.

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Your Credit Card issuer will send you a statement every month, which records all the transactions you have made during the previous month. The credit card statement will be delivered to you through your preferred channel(s), i.e., registered email IDor a printed statement mailed to your registered postal address. The monthly Credit Card statement is an important document with a lot of useful information and has to be read and checked carefully. It is advisable to contact your respective card issuing company/ bank if you find any suspicious or unauthorised transaction in the monthly statement.

If you are new to the world of Credit Cards and do not understand as to how you should read your credit card statement, then here are some insights on important aspects card statement you should know about. Whether you have SBI Credit Cards or HDFC Cards, the information is true to all card providers.

1. Transaction Details

This section lists all the transactions of the previous month in chronological order with details like the date and time of the transactions, deducted amount, any extra charges incurred, place of the transaction, etc. Apart from the list of transactions, details about any extra charges that have been levied on your Credit Card by the bank such as any interest rate changes, tax-related changes, etc. It is important to check each and every transaction, and the charges levied carefully.If you are unable to understand anything or have spotted a mistake, then contact the issuing bank immediately.

2. Minimum Amount Due

Credit Card companies allow the customers to pay a percentage of the total outstanding amount if they are not able to pay the entire amount for any reason. The minimum amount due will be a small fraction of the total outstanding, which ranges between 5% to 10%, subject to the card issuer’s policy. If you pay the minimum amount due, there won’t be any late payment fee; however, interest on the remaining outstanding amount will be charged for the time period it stays unpaid in your statement.

The late payment fee may range from Rs. 100 – Rs. 1000 depending upon the total outstanding amount and the policy of the provider. Any late payments or cheque bouncing will affect your credit score negatively.

3. Total Outstanding

This is the total amount that has to be paid for the month, including any EMIs and charges levied in the current billing cycle as well as amount outstanding for the last billing cycle. The total outstanding amount should be paid to avoid any interest charges on the Credit Card. Most Credit Card companies offer an interest-free period of up to 50 days if you pay the entire outstanding amount before the due date.

4. Credit Limits

This is the section with three types of limits mentioned, i.e.:

  • The total credit limit which shows the total credit limit offered on your Credit Card by the bank. This limit can be increased or reduced by the bank periodically.
  • The available credit limit is the amount that is available after you have made any purchases on the Credit Card. As you make regular payments, it is added to the available credit limit.
  • The banks also offer some cash limit to the users, which is usually a portion of the available credit limit.

The available credit limit can be used for any types of transactions like shopping, payment of utility bills, etc. However, the cash limit can be used only to withdraw cash from the ATM.

5. Due Date for Payment

Another important part of a Credit Card statement is the due date for payment. If the payment of even the minimum amount due is delayed past the due date for any reason, two types of charges will be levied. Interest will be applicable on the total outstanding amount, and a late fee will be levied. The interest charges will be a percentage of the total outstanding amount, and the late fee is usually a fixed amount set by the bank. However, the late fee will be charged only when you fail to pay the minimum amount due on the card before the due date. Failure to pay the minimum amount due might affect your credit score, as it is reflected in your credit report.

The DPD (Days Past Due) section of your credit report shows all the late payments. It is advisable to make at least the payment for the minimum amount due in case you are not able to pay the total outstanding for the billing cycle.

6. Account Summary

This section offers a quick overview of your Credit Card. This section shows details like the opening balance, which is the available limit of your Credit Card at the start of a new billing cycle, the amount spent in the current cycle, the payments made towards the card and any extra charges levied in the current billing cycle.

7. Reward Points Summary

This is the section of the Credit Card report that highlights the reward points you have accumulated during the billing cycle and the total reward points available. It also notifies if any reward points are likely to expire and the information about the reward points claimed by you.

8. Offers

This section of the card statement indicates any special offers available on your Credit Card.

It is important to understand the terms and conditions related to a Credit Card before applying for one. You must also understand how to read and analyse a Credit Card statement. In case of any dispute with regards to transactions and charges or need any information, you must immediately get in touch with your Credit Card issuer.

Also Read: Credit Card Statement Balance vs Current Balance: What’s the Difference

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