10 important things to check in your credit card statement
- Reading a credit card statement helps users keep track of spending, transaction charges, reward points and any other important information related to their card
MUMBAI: A credit card statement is a detailed summary of your card usage which includes payments, purchases, credit balance, reward points, etc. Most cardholders look at the minimum or the total amount due and skip the rest of the statement. It may be useful to pay attention to the finer details of your statement.
Why is it important to check your credit card statement?
As mentioned above, the credit card statement is a summary of how you have used a credit card for the billing period. Imagine unnecessarily paying for the transactions that you have never even placed!
“Reading the credit card statement helps you spot unclear or doubtful transactions. Credit cards are often seen as a tool that can be used to buy anything with just a few clicks,” said Pranjal Kamra, CEO, Finology, a Raipur-based Fintech firm. “Often while doing so, we forget about the debt that we are piling upon ourselves. So, these statements further help us keep a track of our spending and help us manage it better. It also helps us maintain and keep a check on our credit score, as analysing such statements would persuade us to not take more credit, thus avoiding lowering the credit score,” Kamra added.
Further, Adhil Shetty, CEO, BankBazaar.com said, “Whether you are a veteran credit card user or a new one, knowing how to read your credit card statement will keep you on top of your borrowings, help you get the most out of your reward points, and allow you to spot anomalies such as frauds.”
Thus, while going through your credit card statement, you must pay attention to these 10 important heads.
Statement due date: This should not be confused with the payment due date. Your statement due date is just the date on which your statement is generated. Interest for late payment is usually charged starting from the first date of the statement generated to date.
Payment due date: This is the date by which the outstanding amount has to be credited to the card issuer company. If you are settling the amount by cheque, keep in mind that it could take 2-3 days for clearance. For this reason, it is best to avoid postponing payments until the payment due date.
Grace period: “There is a ‘grace period’ of three days from the end of the payment due date for the outstanding amount to be paid,” Shetty said. “Late payment penalties are only imposed if no payment has been made even after the grace period. If dues are not paid before or during the grace period, interest will start accruing on the outstanding amount which will be reflected in the next billing cycle and statement. However, many credit card companies also give a ‘grace period’ of anywhere from 20 to 25 days from the end of one billing cycle to the next due date for your payment,” Shetty added.
Minimum amount due: This is a percentage of the outstanding amount (typically 5%) or the lowest amount (a few hundred rupees) that needs to be paid for late fees to be avoided. Even if the minimum amount is paid, interest will start accruing on the outstanding until it has been settled in full.
Total amount due: The total amount due will include not just the amount that has been spent the previous month but also any applicable interest or late payment charges, the outstanding carried forward from the previous bill, service charges, overdrawn fee, transaction fee, cash advance charges, etc. The annual fee for your credit card will also be included in the total amount due.
Billing cycle: This is the period between two consecutive statement dates. Normally, the billing cycle has a duration of 30 days. All the transactions that were made during those 30 days will be reflected in the credit card statement.
Details of transactions: This is the list of all transactions made using the credit card, both in-store and online. It will include the date, particulars, and transaction value. It is important to go through this list carefully to ensure that there nothing is amiss. Another important reason to study your transaction list is to analyse your spending habits and help in creating space for more savings in the long run.
Credit limit: This is the limit that has been fixed on your credit card by the bank which is the amount up to which you can spend on the card. “The credit limit can be revised from time to time,” Shetty said.
Reward points: Keeping an eye on your reward points will help you to redeem them at the right time before they expire. “One of the major advantages of credit cards is these reward points that can result in significant savings over time if used judiciously,” said Shetty
Important information: Shetty said, "This section of your credit card statement is a summary of any changes in the interest rates or terms of usage or features. Reading this helps to understand and use your credit card smartly."
Understanding the various heads in your credit card statement will help you use and manage it much more efficiently.
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First Published:7 Jan 2021, 11:47 AM IST
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