You need a decent credit score to apply for
different types of loans. How do you build up a credit score? Using a Credit Card
wisely is the best way to build up an excellent
credit rating. Banks have facilities where they approve new Credit Cards
with minimum limits to help you build a credit history. It is your responsibility to use the Credit Card wisely. The first
step towards achieving this objective is to know to read your Credit Card
statement. Let us look at some of the handy tips to enable you to understand
your Credit Card statement better.
Due date for payment
Banks are mandated to send your Credit Card statements monthly
irrespective of whether you have used the card during the month or not. It also
does not matter if there is no amount due from you. You should receive the
statement every month. The first thing to notice on your Credit Card statement
is the due date for payment. You have to make the payment of the card bill either on or before the due date. If you fail to do so, you are liable to pay a
penalty that can range from Rs. 300 to Rs. 1,000 depending on the Credit Card
you use and the amount due of the card. Late payments entail you to pay
interest at the contracted rate. What can you do if you do not have the funds
available to pay the Credit Cards dues on the due date? It brings us to the
concept of ‘Minimum Payment Due.’
Minimum payment due
Credit Card issuers are aware that not all
people can pay the entire bill amount on the due date. Hence, they have come up
with a unique concept known as the ‘Minimum Payment Due.’ It is a fraction of
the total payment due (usually 5%). Paying this amount before the due date can
help you save the late payment penalty. It also ensures that your card remains
live. You can use your card as you usually
do. However, you have to pay interest at the contracted rate from the date of
incurring the debt up to the time of
payment. You also lose the benefit of the interest-free
period that comes with every purchase if you pay any amount less than the total
sum due on your Credit Card.
Total outstanding
The total outstanding figure is the amount
you have to pay on your Credit Card account during the particular billing
cycle. It includes the EMI (Equated Monthly Instalment) if you have availed
this facility. Note that the banks exclude the EMIs from the total amount while
calculating the minimum payment due. This example will prove things better.
You have a total outstanding amount of Rs. 30,000 including an EMI payment
of Rs. 5,000. Your minimum amount due
is 5% of Rs. 25,000 plus the EMI amount Rs. 5,000. It amounts to Rs. 6,250.
Credit limits
Look at your Credit Card
statement carefully. You
will find the mention of three limits:
a) Total Credit Limit: This limit is the one approved by
your bank or Credit Card issuer.
b) Available Credit Limit: As you use your card for
purchasing various products and services, you utilise the credit limit
sanctioned to you. The available credit limit is the difference between the
total credit limit and the total outstanding amount payable on the card.
c) Cash Limit: Every Credit Card comes with a
cash limit that is a sub-limit of the total credit limit. It is usually 30% of
the available credit limit. You can use this cash limit to withdraw money from
ATMs. Note that every withdrawal attracts a ‘Cash Advance Fee’ in addition to
interest at the contracted rate from the date of withdrawal of cash up to the time
of repayment.
Transaction details
This section contains the list of
transactions you have made during the billing cycle. It includes exhaustive
details of the date and time of the transactions,
place of transaction, the amount, and so
on. You can verify the entries with the charge slips. Inform the bank if you
find any discrepancy. It is always advisable to retain the charge slips until
you receive the monthly statement. This section contains additional details
like changes in interest rates, tax rates, and so on. Usually, the banks are
accurate, but there is no harm in checking the genuineness of the transactions.
Account summary
The Account Summary is a ‘Quick View’ of the
credit card during the current period. It displays the following information.
a) Opening balance - the available
limit on your credit card at the start of the billing cycle
b) Amount spent on the credit card
during the billing cycle month
c) Payments made by you towards the
card plus any additional charges
d) Closing balance – The available
limit on your Credit Card at the conclusion of the billing cycle
Reward point balance
The Credit Card statement shows the rewards
points you have accumulated over the period along with its status. You can also
find information about the reward point balance carried forward from the
previous cycle, points you have earned in the current cycle, and the lapsed
points as well.
Learn how to read your credit card statement.
It can help you build up a decent credit score so that you can Apply for New Credit Cards and other loans.
To apply online for Credit Cards,
Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the
leading online lending marketplace that offers financial products from 60+
Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists
toll-free at 1800 103 4004 to know more about our products and offers.
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