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Looking at your credit card statement is certainly not an enjoyable experience. Apart from high bills, your credit card statements also have intricate calculations and difficult-to-understand terms. But a responsible consumer will always make efforts to read the statement thoroughly. People who do not care to take a closer look at credit card statements often end up drowning in debt. So make sure that you understand the following terms related to credit card statement:
Credit limit: This is the maximum amount the credit card company will allow you to borrow.
Current balance: This is the amount you owe to the credit card company.
Minimum amount due: This is usually 2%-5% of your balance. You monthly payments cannot be less than this figure.
Statement date: The date on which the bill is generated is called statement date.
Payment due date: You must pay the minimum amount due by this date. Otherwise, your credit rating will be affected and penalties will be imposed on you.
Cash advance: Credit card companies allow you to withdraw money from ATM. However, there is a limit to it (usually 30% of the credit limit). This is called cash advance.
Reward points: You earn reward points by buying something. There will be a figure on your credit card statement which will tell you the total reward points you have.
For a newbie, credit card statements might look puzzling. So it is important to keep in mind the above points.
One of the most intricate things about credit cards is the calculation of interest rate. For instance, a lot of people are absolutely clueless when it comes to understanding the “annual percentage rate” or APR. You are bound to come across this term if you are dealing with plastic, but few people have a clear concept of APR. You should be aware of the fact that if you don’t understand APR, you won’t be able to understand your credit card statement completely. So let’s try to demystify APR.