Do you know how to analyze your credit card statement? Since it’s more than just your monthly credit card bill, learning the ins and outs of your statement is important. For one, it gives you in-depth information about your usage in the last billing cycle.
In addition, it tells you about the limits and benefits you can access on your card. This empowers you to manage your upcoming expenses accordingly in the current billing cycle. Considering this, it is important to know how to read your credit card’s monthly statement.
Components of Credit Card Statement
Here are all the components you can find in your credit card statement:
1. Statement Date
As the name suggests, this is the date on which the issuer generates your statement. More importantly, this is the day on which interest starts accumulating on your previous dues. So, knowing this date is crucial if you have not paid your full credit card bill from the previous billing cycle.
2. Payment Due Date
This is the date when the issuer expects to receive the bill payment. It is imperative to make a payment by this date to avoid penalties. This can be due to:
- Processing delay
- Technical error
- Any other issue
In such a case, your payment will be past the payment date. Thus, it’s advisable to make payment on or before the due date to avoid interest fees and penalties.
3. Billing Cycle
In simple terms, the billing cycle is the period for which issuers monitor your credit card activity for statement generation. The number of days within this cycle varies between issuers.
Knowing your cycle helps you understand when you spend and how to budget for big-ticket purchases. It is also beneficial for calculating your interest penalty and late charges.
4. Grace Period
If you are unable to make the payment on your credit card bill as per the due date for any reason, issuers give you a buffer. This period is the grace period, during which issuers do not charge you any interest.
As per the Reserve Bank of India (RBI) guidelines, issuers must provide the cardholder with a minimum of 3 days of grace period after the due date. If you don’t make payment within this period, interest will apply, calculated from the payment due date.
5. Transaction Details
This is a record of all your purchases during the billing cycle. This section of the statement helps you evaluate your spending habits for better financial planning. Moreover, you can check if there are any unauthorised transactions or discrepancies before making the bill payment.
6. Total Amount Due
This is the full amount you have to pay by the due date in order to avoid any late payment charges or interest. This amount includes your transactions in the recent cycle as well as any carryover from the previous one, with any applicable interest and fees.
Understanding the composition of this amount helps you estimate your payable sum and avoid any risk of overcharging by the issuer.
7. Minimum Amount Due
This is a unique feature of credit cards, using which you can avoid any late payment fine in cases of limited funds. The minimum amount due is generally 5% of your total amount due, which waives late fees.
While this may seem like a convenient option, the issuer will still charge you interest on the outstanding amount. Thus, paying only the minimum due incurs interest, adding to your financial liability.
In the worst-case scenario, you may fall into a debt trap. So, it is in your best interest to use this option only under financial strain and clear your dues as early as possible.
8. Credit Limit Availability
This is the amount available on your credit card for use before you have paid your bills. With the credit card balance check, you can ensure you have enough funds available for any future payment to go through.
Let’s assume your credit limit is ₹1 lakh, out of which you made a purchase of ₹45,000. In this example, your credit limit available is ₹55,000. Once you pay off your bills, this limit will automatically go up to ₹1 lakh, available for use.
9. Cash Advance
This is the amount withdrawn using your credit card from the ATM. Credit card cash withdrawals attract interest at a very high rate, which can add to your financial liability. Therefore, it is best to keep it to a minimum and pay it back at the earliest.
10. Reward Points
If you have any reward points remaining or expiring soon, your statement will mention it. Knowing the number of points you have available can help you plan how to use them to your advantage for discounts or purchases.
Since these terms are the same for almost all financial institutions, understanding what they mean can be extremely helpful. Some issuers also allow you to view all this information on their credit card mobile app for round-the-clock access. One Credit Card is such an option.
With the One Credit Card app, you can easily track your transactions, reward points, due dates, outstanding balance, and more. The standout feature of this powerful metal credit card in India is its reward program, which allows you to earn 5X points on the top two spending categories per month.
In addition, you can enjoy an EMI facility, zero annual and joining fees, no hidden charges, 5-minute onboarding, hassle-free digital application, and more. Apply online to get started.