A credit card statement is a document containing the details of all the transactions made with that particular credit card in the last billing cycle. It is probably one of the most important documents provided with a card, carrying several vital information like due date and amount, credit limit, transaction history, account summary, reward point details, etc.
Card statement is necessary to track your expenses and maintain an appropriate spending pattern account. Periodic checking of the details eliminates chances of billing error, fraudulent and unauthorized activity, and can help streamline your expenses to earn maximum benefit from a feature-rich credit card.
Understanding credit card statement
Credit card companies are legally required to send you the monthly statement at least 21 days before the minimum payment due date. It is usually dispatched by physical mail, or email, you can also view it online as paperless billing statements.
There are several sections in a credit card statement; let’s take a look about these in detail and understand how to read the monthly statement.
Transaction history – The transaction history carries a chronological list of all financial transactions you have made during the last billing cycle with your credit card. Every entry will include the date of payment, description (where did you make the transaction) and the total amount you paid. It will also carry any details of credits into your accounts, such as a refund or cashback you might have earned.
It is important to go through the transaction history whenever you receive your credit card statement. You can identify any unauthorised, fraudulent transactions and check whether all the payments were of the correct amount from this segment of your card’s statement.
Account summary – Along with transaction history, card statements also carry details such as account summary, including its opening balance, payments made towards that card, any extra charges levied on the present billing cycle, etc. It is an overview of your card’s details for that particular billing period.
Any payments and transactions posted to your account after that billing cycle will reflect in the next month’s statement. However, it can be checked anytime by logging in to your online card account.
Total outstanding – A monthly statement will also include the total outstanding amount (sum of all your transactions during the billing cycle and any existing past dues) and the minimum amount due. Ideally, you should repay the total outstanding amount every month to avoid any charges levied on your credit card account.
This section may also include any amount payable as ongoing EMIs.
Total interest and fees paid – Credit card statements include a running total of interest and fees you pay to your card company every month. You will also find a detailed summary of the monthly interest calculation, as different types of purchases and spending (like balance transfer, cash advance, etc.) accumulate different rate of interest.
Minimum due amount – Most financial institutions allow paying a minimum due amount if a cardholder cannot pay the total outstanding amount. It is a small percentage of the total due to the credit card. Paying the minimum due amount will prevent charging any late payment fee on your credit card account however, you will be liable to pay interest on any remaining balance for the time it stays in your card’s account.
Payment due date – Another important thing on a card statement is its payment due date. It shows the last date within which you can repay the outstanding amount to your financial institution. Usually, it is calculated factoring in the grace period and billing cycle of a particular credit card.
Financial experts suggest paying the outstanding amount within the due date as one of the most important aspects of how to use a credit card. Failing to do so can incur several charges on your card’s account. Lenders charge both interest and a late payment fee on the outstanding amount, interest is charged as a percentage of total due, and late payment fee is a fixed amount that varies between financial institutions. Late payment fee is only charged if a cardholder fails to pay even the minimum due amount within due date.
Failing to pay its minimum due amount will reflect on your credit report and will negate your credit score. Late payments are shown in the DPD (Days Past Due) section of the report. It can lower your score significantly.
Credit limit – Usually, card statements mention three different types of credit limits. These are the following –
- Total credit limit.
- Available credit limit.
- Cash limit.
The total credit limit is the amount sanctioned to a cardholder by the financial institution. Available credit limit is the remaining amount that you can utilize using your credit card.
Cash limit shows the amount that a cardholder can utilize to withdraw money using that credit card. Certain credit cards, allow its users to utilize it as a cash card. You can withdraw money from ATMs against a flat processing fee of only 2.5%, completely interest-free for up to 50 days.
They also bring you per-approved offers on credit cards as well as several other financial products, including unsecured loans like personal loans and business loans and secured credits like home loans. You can check your per-approved offer by sharing only your name and contact details on their website.
Reward points detail – Credit card statements also carry the details of reward points that you have accumulated over your period of usage. This section includes the number of points you are carrying forward from previous cycles as well as points earned in the current billing cycle. You will also find relevant details like the expiration date of accumulated reward points and whether any points have lapsed during that billing cycle or not.
Carefully scrutinizing these above mentioned aspects of your card’s statement will help you understand all the details and necessary information regarding your credit card’s account. It is one of the first steps of learning how to use a credit card responsibly and earn the most benefits from that line of credit.