If you are one of those who have recently got your first credit card, or have had a credit card for sometime but started using it only now, here is how you need to read your credit card:
Payment due date: The most important element in your credit card is the payment due date. If you don’t pay your credit card bills on the due date, you will have to pay an interest on the balance amount in your credit card. You will also have to pay a late payment fee. Credit cards usually come with a 45-days interest free period. This means, if you pay on time, you don’t have to pay any interest on your credit card spends. But after this limit, if you don’t repay then you will have to pay an interest that can range between 22% and 44% per annum.
Minimum amount due: Credit card companies give you an option to pay a minimum due amount. If you pay only this minimum amount, you will not be charged a late payment fee. The late payment fee is usually a flat fee of between Rs100 and Rs1,000 and depends on the amount and your credit card provider. However, you will still have to pay interest on the balance amount in your card.
Limits: There are three kinds of limits mentioned on your credit card statement: credit limit, available credit limit and available cash limit. Credit limit is always higher than your cash limit. If you have a credit limit of Rs3 lakh, the cash limit could be around Rs1.2 lakh. Credit limit is the amount you can use by swiping your card, while cash limit is the amount you can withdraw from an ATM. While you get an interest-free period for credit card spends, the interest on cash withdrawals kicks in immediately.
Account summary: The account summary gives you a break-up of your opening balance, when the billing cycle started, the last payment you made, the amount you spent in that billing cycle and any previous financing charges. It also gives you details of your past dues of even over 3 months.
Important information: This sections tells you about things such as change in interest rates, change in the rate of tax or any revision in the features of your credit card. Read this section carefully to ensure that you use your credit card accordingly.
Transaction description: This section of your credit card statement will give you details of all the transactions during the billing cycling including: date and place of transaction, and its amount. In case of a discrepancy, alert the bank immediately.
Reward points: Many credit cards offer benefits such as rewards for using your credit card. The reward points table gives you details of how many points you have collected so far, how many reward points you earned in the billing month, lapsed point and the total points.