Each year, credit card circulation in India shows a significant increase than the previous year. For example, the period between 2018 and 2019 showed an increase of up to 27% in the number of active credit cards.
With such robust growth, one would expect users to be more aware of credit cards and all its essential components. A piece of adequate knowledge regarding how to use a credit card or manage its expenses can provide for improved utilization of the financial instrument.
Nonetheless, users can eliminate their lingering doubts about credit cards’ usage, recurrent expenses, and transactional errors by simply keeping a close tab on their monthly credit card statement. To do that successfully, individuals must make it a point first to find out what exactly to look for in these statements.
Things to check in a credit card statement
A monthly statement of the credit card does not just serve as a record of transactions but is also quite useful when it comes to facilitating financial management.
To understand this, keep a tab on the following in your monthly card statement.
- Statement date
It denotes the date on which a user’s card statement is generated. Being aware of this date allows cardholders to take an update regarding other crucial information in time and manage their dues accordingly.
- Payment due date
It indicates the date by which the credit card provider requires cardholders to pay their monthly dues. Typically, it is advised to pay credit card bills 2-3 days before the slotted date to remain worry-free of any missed payments. Missing the due date attracts interest at high rates.
- Grace period
The grace period is an interest-free period of 15 to 20 days that provides cardholders a relief of a few days in making due payment. Notably, this period may differ from one institution to another.
- Billing cycle
It is the period between two monthly statement generation dates. A credit card statement serves as a record of all the transactions that are made during this specific cycle. Also, keeping a track of the billing cycle can help utilize the available credit limit to its maximum.
- Total amount due
It is a sum of the monetary transactions made within a billing cycle. Other additions to the due amount include the balance from a previous billing cycle that has been carried forward, penalty, late fee, interest amount, etc.
- Minimum amount due
It is essentially the least amount of money that a cardholder can pay to avoid paying a late fee for a given billing cycle. However, it is recommended to pay off the total due amount to eliminate the debt burden early.
- Available credit limit
It is the upper limit up to which cardholders can spend through their credit card. Any transactions made with the credit card reduce this limit and bill payment restore this limit. Individuals can further look for tips to increase the card limit and make higher spending.
- Transaction history
The transaction history serves as a record of every purchase or borrowing that a cardholder has made during a billing cycle. The exact date and amount against transactions further help to identify the nature of all transactions and help track one’s spending habits.
- Cash advance limit
Individuals can avail cash advance from a portion of their credit card limit and increase their cash disposal in case of an emergency. However, such advances attract a higher rate of interest and processing fees. Such a limit can be checked in the card statement to make good use of the facility.
Some credit cards like the Bajaj Finserv RBL Bank SuperCard also extend cash advance facility with a predefined interest-free period and also levy a reasonable processing fee.
- Reward points summary
Credit card statements also show the reward points which have been accumulated in a given billing cycle. Cardholders can check how much reward points they have earned through specific transactions. Notably, to make the most of these, users should know how to redeem credit card reward points before their validity.
Hence, being aware of the components of a credit card statement will come in handy in managing the unwarranted expenses and eliminating a significant risk of incurring high interests or other charges. Similarly, the compact record will also help to track transactional mistakes more effectively.