Credit card statement made easy

When was the last time you took a detailed and unhurried look at your credit card statement? Do you understand every printed detail that appears on your credit card?

Your monthly credit card statement is the best document that will help you understand your monthly spending. Reading and understanding the fine print of your statement, will help you in practicing proper credit card management. It will also help you learn how your credit card works.

What is a credit card statement?

A credit card statement is the monthly billing statement you receive from your credit card issuer. It lists all the transactions done using your credit card, and the total outstanding balance, payment date etc.

Credit card statement essentially has two parts. One is the payment coupon which you detach and enclose with your payments. The second and the most important part of your credit card statement is where your credit activity is listed. We will examine this part in detail below:

Name and address: This is the card holder's name and full address as per the card issuer's records. The only thing you should keep in mind is that, if there is any change of address, you should immediately notify your card issuer/bank in writing and get an acknowledgement for the same.

Reference number: This is the number you will need to quote in case of dispute on any of your charges listed in that particular credit card statement.

Credit card number: Most of the credit cards have a unique 16 digit number assigned to your credit card, usually super-imposed across the credit card. Some credit cards like American Express (AmEx) have 15-digit number. You need to quote this number in your cheque or demand draft while making payments and also for correspondence with the card issuer.

Credit limit: Credit limit is the maximum amount your credit card allows you to borrow, whether as credit against goods purchased or/and cash withdrawn. The card issuing bank can revise credit limit based on your payment track-record. A good payment track record can help you in getting your credit limit increased and vice versa.

Available credit limit: It is the difference between your credit limit and total amount due. If your credit limit is Rs 50,000 and you have spent Rs 1,500, your available credit limit reduces to 48,500.

Cash limit: Cash limit sets the maximum money you can withdraw as cash using your credit card. Your cash limit is a part of your credit limit and so, necessarily has to be lower than your credit limit.

Assume your credit limit is Rs 50,000 and cash limit is Rs 20,000. If you have exhausted your credit limit of Rs 50,000 by making purchases on your credit card, then you cannot withdraw cash using your credit card, even if you have not used your cash limit at all.

Statement date: This is the date on which your bill is generated. This is also the date used to calculate interest rate if you do not pay the full outstanding amount by the payment due date, even though the due date may fall many weeks after the statement date.

Payment due date: This is the date before which your payment (cheque or demand draft) should get credited to the bank. To be more specific, this is the last date by which your payment has to be recorded in your bank's computer.  This is not the date your bill has to be postmarked, or even the date it arrives at the company's office. So be sure that your cheque/DD reaches the bank well before the due date so that no late payment fee is levied to you.

Total amount due: This is the total bill amount to be paid -- the total unpaid accumulated amount outstanding in your account, including interest and any other charges like late payment fees, if any.

Minimum amount due: It is the minimum amount required to be paid to keep your account in a good credit standing. This amount is usually 5 per cent to 20 per cent of your total amount due. If you do not pay the minimum amount due by payment due date, it will be considered as a default and levied a late payment fee.

Tip to remember: Even if you pay the minimum amount due, you will be charged interest on the total amount due (including the minimum amount due that you paid). If you do not want to pay interest you have to pay the entire total amount due before payment due date. Even if you have paid 95 per cent of the total amount due before due date but there is still some small amount pending, you will be charged interest for the full total amount due.

Rewards point summary: This is the record of the rewards points you have earned/redeemed till date. The summary usually gives an account of your opening balance and the points or credits earned or redeemed. You should not confuse reward points with credit limit or balance outstanding. Reward points and the method of redemption vary from one credit card to another.

Transaction details: The transaction details will have the date of transaction, place of transaction (where you spent the money) and the transaction amount. This helps you verify the charges credited to your card.

It is important that you check your credit card transaction details regularly. This is the only way you will come to know if some transaction has been fraudulently credited to your card.