How to Understand Your Credit Card Billing Statement?

Other than the due amount and record of the total purchases we make in a particular time period, the credit card bill includes a lot of information concerning our spending habits. It is imperative for one to be aware additional fee and charges if demanded since it can be an unnecessary expense in your bill. Loanbaba.com helps you understand credit card statement and credit card bills. So let us find out about the different charges that may be applicable in the credit card bills.

1. Previous purchasing balance

This section covers the significant portion your bill which consists of the current as well as the previous balance you've made in your billing cycle. The amount includes any of the previous outstanding bills that are left unpaid and apparently your current charges.

2. Cash advance charge

The cash advance is a cost implied on using your credit card to withdraw money from the ATM. This amount is displayed as a 'cash advance' charge will surely take your attention immediately for these generally have huge interest charges. Thus, one should try avoiding it unless undeniably necessary.

3. Balance transfer

Transferring your debt from one card to the other is possible. This will reflect your debt in the bill that has been transferred along with some interest charges associated with the same.

4. Interest

It is again an important aspect of your credit card bill. This is a cost that is directly linked to the amount of credit you've taken with the card. This is similar to the interest you pay on taking loans. Any failure in payment of interest gets carry forwarded to the next bill. Thus, any non-payment of interest charges in previous period might reflect in the presently drafted bill.

5. Fee

There are various mandatory fee payments associated with your credit card. They are as follows:

  • Annual fee: this is a charge applicable every year. However, in certain cases, this may be broken up into small time periods to easy your payments. It may be monthly, quarterly, half-yearly, etc. However, there are at times specified criteria and offers where you are given an opportunity to waive your annual fee.
  • Transaction fee: this is a fee applied to certain individual transactions. These transactions usually include balance transfers, cash advances, using the card abroad, etc. The percentage of the fee applicable varies based on the card type of the bank.
  • Penalty fee: it is a price to be paid in case you miss out credit card bill or use your credit limit in excess to the limit assigned.
How to make payments of your Credit Card Bill

Once you receive your credit card bill, you should always try to make a complete payment of the amount to evade any special interest rates on the unpaid amount next time. There is a 'minimum amount due' section in your bill. An explanation of the term will help you understand the importance of timely payments. You can apply for online loans to pay credit card bills.

Minimum Amount Due

The name itself suggests that is it a charge you have to pay in order to keep getting credits from your bank. This value is computed using the following formula:

Minimum amount due= Interest + 1% of total due balance

This payment of due amount will help you avoid any payments of extra charges that will be applied to your next bill. It is always recommended to pay the maximum amount due on time unless an unfortunate emergency. This is because each time you accumulate your unpaid balance, it turns out to be a large sum of payment in some years ultimately sinking a major portion of your income in paying off debts.

Payments less than the minimum amount is called as a missed payment. Read further to know more about it:

What Happens on 'a missed payment.'

A missed payment can result in hostile consequences applying hefty late payment charges based on the time taken to pay the pending bill. You can take loan to pay credit card bills. The charges and penalties of missing payment might turn out to be a costly mistake you would end up regretting.

Besides, the overdue bills will bring a negative impact to your credit score making lenders wary of extending loans. Thus, it is always preferable to make timely payments as soon as you receive your bills regretting later on forgetting to make the payments.

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