We are all aware of how important a credit card is when you’re working on building your credit profile. One can judiciously use a credit card for developing a good credit score, but this needs to be done carefully! Now, if you’re someone who is used to using a credit card, you probably are aware of the nitty-gritty of your credit card statements, but if you’re someone new to the world of credit cards, we’re here to save the day! In this article, we would be giving you our top 10 tips on how to read your credit card statement and the different types of charges given in it and this is something important that a credit card user ought to know, irrespective of whether you’re a newbie or have been using your credit card for quite some time; if you’re confused or don’t know how exactly to go about reading your credit card statement, then this is just the article you need!
To give you a little background, a credit card statement is a statement listing out all your transactions for the month and banks are obligated to provide these to you every month. They can either do this by sending a hard copy of the statement to your registered address or send you an e-statement on your registered e-mail address. The latter is what most banks have turned towards in recent times. However, where there is no outstanding balance on your card or no transactions for that particular month, your bank may not issue a credit card statement to you.
Having a thorough understanding of your credit card statement is not difficult, and if done regularly and properly, it can help you stay away from debt! Typically, when you receive your credit card statement, there are various elements in it that you should have a good understanding of. Read on to know exactly what to look out for in your credit card statement!
- Statement period
The billing period for which the statement is issued is usually on the top of the bill. This period generally is of one month, for instance, if your statement period starts on August 12th, it would end on September 13th. This period must always be noticed in order to notice firstly, that your bill/statement is issued for the correct period and secondly, to notice the number of interest-free days your bank has given to you for that month. Interest-free days are calculated from the starting date of the statement period and are not calculated from the date you make the purchase.
- Payment due date
The payment due date is located at the top corner of your statement and can usually be found written below the statement period. This is the date by which you are required to pay the outstanding amount on your credit card. Any payment that you make after this due date would attract penal charges, such as, finance charges and late payment fees.
- Minimum amount due
Ordinarily, by the due date, you should pay the full amount due, but if due to any reason you’re unable to, you should at least pay the minimum amount due. If you didn’t even pay this minimum amount, then you would attract late payment fees along with hefty finance charges.
- Account summary
This essentially is a summary of your credit card balances and shows your opening balance. The ‘opening balance’ is the limit your credit card has at the start of a new billing cycle. This account summary also includes the amount spent in the current cycle and the payments made towards the card, also includes any extra charges that were levied in the billing cycle.
- Transaction details
You ought to have a careful look at the transactions you made during that particular billing cycle, including the date, time, and amount of those transactions. You also need to be on the lookout for any charges, fees that may have been levied, and the place of the transaction as well. You should immediately inform the issuing Bank if you discover any discrepancies.
- Interest and charges
Besides the transaction amounts, your credit card statement also reflects any changes that the bank affects through interest rate fluctuations, tax rate fluctuations, and so on. Your statement shows something called ‘Finance charges’ levied on your account. These are payable at a pre-determined monthly rate, on all the transactions being undertaken by you, in the vent of you not paying the outstanding dues in full. It is also charged on all cash advances taken by the holder and is levied until such amounts are paid back.
- Total Outstanding
Ideally, you should pay all the outstanding charges on your credit card which would ensure that no extra charges are being levied on such amounts. This ‘Total outstanding amount’ would also include any and all EMIs that you are liable to pay along with the charges to be paid in that billing cycle.
- Total & Available Credit Limit
The total credit limit is the total amount that is sanctioned to you by the issuing bank and the available credit limit is the amount you are left with to spend for the rest of the month. It’s essentially the amount that you can still utilize. You should always look at these amounts and check whether they are accurate or not.
- Cash Limit
The cash limit provided to the holder is usually a portion of the available credit limit. The difference between the credit limit and the cash limit is in its usage. The available credit limit can be utilized through any mode, such as online shopping, bill payments, and so on, whereas the cash limit can only be utilized for withdrawing money from the card at an ATM facility.
- Rewards & Reward Point Balance
Your statement also has rewards that you have gotten throughout your billing cycle and also reflects the reward points carried forward from the previous billing cycle. However, not that this only applies to the credit cards that have a reward program associated with them. This column would also show the points disbursed, lapsed, and those that have been redeemed.
In conclusion, it is essential to check each and every part of your credit card statement carefully and thoroughly and contact your bank immediately, in case you found any discrepancies. It is not very difficult to comprehend your credit card statement and it is very important how you react to the information given in your statement. Once you get the hang of how to understand your credit card statement, you’ll be well on your way to a financially stable and responsible future.
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