You use your credit card to pay for your purchases, pay the bills and various other purposes. Your card issuer then sends you the card statement for the transactions that have taken place in your account. Do you know how to read it? What do all the terms in the statement stand for? Here we explain the most important terms in simple terms.
- Payment due date: Payment due date is the last date by which the card issuer expects to receive your payment. If you pay after this date, you are charged penalty.
- Minimum amount due: This is the smallest amount you must pay. However it is advisable to pay more than this amount in order to avoid paying interest on the outstanding amount. Normally the rate charged on the unpaid balance is very high. You can very easily fall in debt, if you continue to pay only the minimum amount due.
- Total amount due: This is the actual amount you are expected to pay. It includes any previous outstanding amount, transactions that have taken place in your account and any payments you have made.
- Total amount due = Outstanding amount + New Transactions – Payments/Credits
- Finance charges: If you have paid your previous bill late or have paid only the minimum amount due or your cheque has been returned, then your card issuer will charge penalty for you. These penalties are listed under finance charges
- Credit limit: This is the highest spending limit available for you to spend.
- Cash limit: This is the highest limit available for you to withdraw cash by using your credit card. However you must remember that you will be charged for this withdrawal unlike the withdrawal done by using a debit card.
These are the most common terms that you will see on your card statement. If your card offers reward points, then you can see the reward point summary at the bottom of the statement. Similarly, if the bank wants to send any important messages to its customers, it may be printed at the bottom of the statement. So it is very important you read your card statement very thoroughly.