There is a common trend among people to avail a credit card as soon as they start earning. In India, the banks approach the users to offer a standard credit card and build up a decent credit portfolio. However, most people face a big problem while reading the credit card statement. This statement contains all the vital information regarding credit card usage.
Guidelines to understand the credit card statement properly
Here, you will get all the information about the credit card statement. The following terms will be present in the statement. You can go through the following details:
Summary of the account
The summary of the account can help you to understand all the credit card related happenings. As credit cards work in accordance with the billing cycles, you can get all the transaction and activity details from the summary of the account.
Due date of payment
The due date of payment is one of the crucial things that are present in the credit card statement. Your credit card issuer will expect that you pay the whole outstanding balance within the due date. You might have to give the interest on your outstanding balance on missing the repayment. If your credit card gives you an interest-free period, no interest will be levied during that particular period. In general, most credit cards provide an interest-free period of 40 to 45 days.
Billing cycle
The billing cycle is basically the thumb rule on which a credit card works. The billing cycle can be variable when it comes to credit cards. A person holding any card should know about the billing cycle from the issuer primarily. In case of a monthly billing cycle, you might check all the transactions made from say, 3rd August to 3rd September. The due date will be 15 days from 3rd September, and you need to pay the total balance by this date.
On missing the repayment, you might have to give the late fees. Further, interest will also be charged with it.
Total outstanding amount
The total outstanding amount is the actual sum of money along with various charges that you need to pay to the credit card company. Paying the total outstanding amount each month helps you to avoid the extra charges that you might have to give.
Credit limit
The credit limit that comes in your credit card statement is of three types. They are:
- Available limit: The available limit of the credit card is the amount of purchases that you can make. If the total limit of your credit is 30,000 INR and you have already borrowed 10,000 INR, then you can see the available limit as 20,000 INR in your credit card statement
- Total limit: The total limit of the credit card is determined by the issuer who is providing the credit card. Before granting a particular limit, the credit card issuer will thoroughly check your monthly income and financial history. As a user, you must always remember avoiding credit purchases that reach near to the total limit. You might get into a bitter debt trap on being unable to repay the outstanding cost within time.
- Cash limit: The cash limit is considered as the maximum amount of cash that you can withdraw with your credit card. However, you should always avoid withdrawing cash from credit cards as the issuer banks consider this as negativity. Your credit score might get hampered a lot due to cash withdrawal with a credit card.
Summary of reward points
Majorly the premium credit cards provide exciting rewards to the holders. A few standard credit cards also give rewards to the users. In your credit card statement, you can find a section where the details of the accumulated reward points are mentioned. This part will also carry the data regarding the ways the user has redeemed the rewards.
Details of transaction
The transaction details of the credit card are the major thing that the issuer publishes in the credit card statement. The way of publishing differs a lot from bank to bank. In general, the transaction details are present in tabular form. You can get all the information regarding the time and date of the transaction, added charges, and total amount deducted.
- So, these are the details about the jargons you might find in case of the credit card statement. Apart from going through it properly, you must also preserve all your recent credit statements as it carries a lot of importance. They are:
- Credit card statements are checked by any issuer bank during document verification when you approach them for the second credit card.
- Your credit card statement is checked by the organization that is willing to provide you with a loan. If your credit card statement is transparent, expect to get a loan with a high capital amount easily.
The credit card statement acts as one of the main financial documents when you set a goal to come out of a debt trap. Expect your credit card statement to be checked legally to determine if you are worthy enough to provide a one-time payment settlement with the issuer bank.
There are a number of credit card issuing banks in India. A person who desires to use a credit card must make sure of going through prolonged research when choosing the right card. Apart from the features, it is crucial to check the types of convenience that the issuer is willing to give you.
If you are approaching a bank to take a credit card for the first time, you should place all your pre-existing financial documents. Always remember that the financial documents play a determining role in case of a seeker getting a credit card or not. Furthermore, if you successfully get a credit card, always try to keep the credit score high.
High credit score can not only increase your creditworthiness, but you can also observe its advantages on the credit card statement.