The total amount due in credit card statements reflects the amount you’ve utilised during the billing cycle and need to pay to restore your limit. If you don’t pay the entire amount by the due date, the balance is carried forward to the next billing cycle. In this case, your transactions start accruing interest from day one without any grace period.
Understanding this total outstanding amount and what contributes to it is crucial for your financial well-being.
What is the Total Amount Due on Credit Cards?
Here is an overview of the total amount due in a credit card statement:
- The total amount due is the amount that you need to pay to the issuer at the end of the billing cycle.
- It is a total of the expenses, any amount carried forward from the previous cycle, and any applicable charges and penalties.
- The credit card companies display this amount on your monthly account statement prominently and in bold.
- Failing to pay this amount on time can result in late charges, and your credit score may take a hit.
- The minimum amount due on credit cards is different from the total amount due, as it’s a fraction of the total due.
What Constitutes Total Amount Due in Credit Cards?
Knowing what contributes to your bill amount can help you make informed decisions and navigate credit card usage responsibly. Here’s a list of crucial factors affecting the total amount due on credit card and tips on what you can do to have a stress-free experience:
Purchases
- The cost of each purchase you make using a credit card in the billing cycle.
- These can include everything from your transactions at fuel purchases to online shopping.
- Knowing your current spending can help you forecast the total due amount you’ll have to pay, and you can budget accordingly.
- This ensures that you can plan for the full credit card bill payment on time.
- Monitoring your expenses can also help you keep a tab on your spending habits and stay within the predetermined budget.
- Being mindful of your spending habits also allows you to avoid surprises when you get the credit card bill.
Purchase Returns
- If you return an item purchased with the card, the refund amount will be reflected in your credit card statement.
- These credit transactions will lower your actual due as the issuer already has received it from the merchant.
- If the refund is processed after bill generation, it will be reflected in your next statement.
- Some credit card companies provide a return amount protection, which allows you to get a refund even if the merchant denies the request.
- Others allow you to enjoy a refund on your credit card balance only if the merchant provides it.
Other Payments
Any transaction initiated through your credit cards has an impact on the total amount due in credit card statement. This also includes:
- Paying utility and other bills
- Paying your insurance premiums
- Paying your EMIs and other monthly obligations
- Recurring payments like premiums and EMI will reflect in your statement until you stop the payment or the account closes.
Interest Charges
- Finance charges will apply if you carry your balance from the last billing cycle.
- The issuers calculate these based on the Annual Percentage Rate (APR)
- The higher the APR, the higher the interest charges will be
- The interest rates on credit cards have a compounding effect and can have a significant impact on your total amount due over time
- It is best to pay the entire bill or at least the minimum amount due on time to avoid these costs
Late Fees and Other Charges
- If your credit card bill payment in the previous cycle was late, the total amount due will also include late charges.
- If you make a cash withdrawal with your credit card, the statement will also contain a cash advance fee along with interest.
Rewards Redemption
- If you redeem your rewards to pay for any transaction during the billing cycle, the same will be reflected in your statement.
- The statement will also reflect any redemption fee or charges that the issuer may levy.
- If you redeem the points to pay a portion of your credit card bill, it will be reflected in the next statement since it would be a new billing cycle.
Owning a credit card can become an asset only when you know how to manage your finances responsibly. By paying off your total amount on time, you can avoid the pitfalls of compounding late payment fees and debt traps.
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