We might have become accustomed to using a credit card, but the same cannot be said about reading our card statement. We still feel stumped about certain terms or part or information in the statement. A credit card statement presents the summary of various expenses and payments made on a card in a month. Thus it is imperative for every credit cardholder to know the details on his/her card statement to get a complete picture of the existing situation and frame further strategies for a better usage. Here, we list some of the important details on the card statement that need attention.
General information
The first section on a credit card statement deals with the general information relating to the card.
- A credit card statement contains general as well as transaction details
- It does not show sensitive information like CVV No. to prevent misuse of information
- On missing the payment due date, a cardholder has to pay interest on all amounts on the card
What's on the card
Statement date: This is the specified date of each month when the credit card statement is generated. Your card statement will include all transactions in the month on the card till that particular date.
Payment due date: This is another important date on the statement. This is the date by which you should make payment to the bank or the interest charges will apply on the amounts remaining to be paid on the card.
Credit limit: It is the maximum expense allowed on a credit card. There is another detail that will show the available credit limit. This is the amount of the limit that is not utilised and calculated as the total credit limit minus the used credit limit.
Cash limit: This tells a cardholder the available cash limit for him/her. This is the maximum amount that can be withdrawn in cash using the card. It is usually a small percentage of the credit limit, so if the credit limit is say Rs 1 lakh then the cash limit will be Rs 20,000, and so on.
What's not on the card
Sensitive information like the expiry of the credit card and the CVV number is never found on the credit card statement. This helps prevent misuse of the information in case the statement falls into the hands of a stranger or is seen by someone unauthorised.
Transaction details
Transactions made using a credit card are the main reason why a credit card statement is generated in the first place. The statement reflects the transactions from the issue of the last statement till the date of the current statement.
Payment/Funds Transfer: This will include the payment made for last month as this will be done after the last statement is issued.
Entry: A number of expenses are made on the card during the month, and as the nature of a transaction is known only from its details it is very important to understand this aspect. An expense made is shown as an entry in the name of the entity where the expense is made.
E.g., shopping at Westside will show it as WESTSIDE or SMART PAY FASCEL for telephone charges under a specific plan.
Proc fees: This is a separate head used to show the processing or other fees, if any. There can also be specific charges like foreign currency charges (FXN CHG) or conversion charges (CON CHG) and the notations for each head vary with cards.
Interest charges: If the cardholder has not paid off the amount outstanding in the past month, he/she will have to pay interest charges, also shown as FINANCE CHARGES or SERVICE CHARGES, and the exact notation varies from bank to bank.
In addition, there is a service tax and a cess that is levied on the finance charges. The bank does not show the working for the interest charges levied but an illustration on the other side of the card statement lists out the exact mode of calculation of the interest charges. The cardholder can use this as a guide to check the accuracy of the calculation.
Caution: The moment the cardholder misses the payment due date, interest is levied on all amounts on the card including those expenses in the current month for which the due date for payment has not passed. This concept is called revolving credit which pushes one into an interest cycle that is difficult to come out of.
Overall details
There is another section of the credit card statement that lists out the overall details on the card, giving the cardholder a snapshot of the entire situation.
Opening balance: It is the amount to be paid in the previous month followed by payments/credits and purchases/debits. The former reduces the outstanding balance and the latter increases it.
Finance charges: This is an additional charge that will be added to the amount outstanding, resulting in a higher total amount due.
Minimum amount due: There will also be a section showing the minimum amount due which is 5 or 10 per cent of the total outstanding, depending on the specific credit card. If the cardholder chooses to pay the minimum amount then the person will enter the interest cycle.
