Month: January 2021

1. Statement date

This is the date when your credit card statement is generated. The date is important in the calculation of late payment fee.

In case you miss out on paying your dues, you will be charged interest on the amount due and this interest calculation takes your statement date into account.

The interest will be calculated taking the statement date as the first day.

2. Payment due date

This is the date by which your bank expects to receive payment on the billed amount without additional charges. It is not the date on which payment needs to be made.

In fact, a credit card user must avoid postponing payment due dates as there could be a lag in the payment made and the lender receiving the payment.

For example, if the credit card bill payment was made using a cheque, it could take 2-3 days for clearance. It is, therefore, wise to deposit the cheque at least a week before the payment due date to avoid delay in payments due to bank holidays or other unforeseen circumstances.

3. Billing cycle

It is the period between two consecutive statement dates, which is generally a 30-day period. A billing cycle is a period for which the statement is generated.

All transactions made using your credit card during this billing period will be reflected in the statement. It will also reflect interest penalty and late payment fee (if any), as well as amount received towards payment of the bill or any returns on failed transactions during the period.

4. Grace period

As per RBI rules, banks can impose late payment charges on a card only if the amount due is not paid for more than three days from the payment due date. If not paid within the grace period, the interest will become applicable and will be calculated from the payment due date.

However, it is common for credit card companies to allow a period of 20-25 days from the end of the billing cycle until the payment due. This period is called the ‘grace period’ for credit card bill payment purposes.

5. Total amount due

As the name suggests, it is the total amount due in a billing cycle period. Apart from the transactions made in the previous billing cycle, it will also include interest applicable or any late payment charges on the previous bill, service charges, annual charges and other transactional fees.

6. Minimum amount due

It is the minimum amount the credit card holder needs to pay on his/her bill by the payment due date to avoid being charged a late fee. It is a percentage of the outstanding amount (typically 5%) or the lowest amount (Rs 200 for example) that needs to be paid for late fees to be avoided.

It is important to understand that if the cardholder only pays the minimum amount due, interest will start accruing on the outstanding amount until it has been settled in full. The only respite from paying the minimum amount due is a waiver of late fee.

If a cardholder continues to pay only the minimum amount due, he/she will fall into a debt trap as interest on the unpaid amount becomes due instantly. Therefore, it is advisable to ignore the minimum amount due and pay the “total amount due” if possible.

1. Statement date

This is the date when your credit card statement is generated. The date is important in the calculation of late payment fee.

In case you miss out on paying your dues, you will be charged interest on the amount due and this interest calculation takes your statement date into account.

The interest will be calculated taking the statement date as the first day.

2. Payment due date

This is the date by which your bank expects to receive payment on the billed amount without additional charges. It is not the date on which payment needs to be made.

In fact, a credit card user must avoid postponing payment due dates as there could be a lag in the payment made and the lender receiving the payment.

For example, if the credit card bill payment was made using a cheque, it could take 2-3 days for clearance. It is, therefore, wise to deposit the cheque at least a week before the payment due date to avoid delay in payments due to bank holidays or other unforeseen circumstances.

3. Billing cycle

It is the period between two consecutive statement dates, which is generally a 30-day period. A billing cycle is a period for which the statement is generated.

All transactions made using your credit card during this billing period will be reflected in the statement. It will also reflect interest penalty and late payment fee (if any), as well as amount received towards payment of the bill or any returns on failed transactions during the period.

4. Grace period

As per RBI rules, banks can impose late payment charges on a card only if the amount due is not paid for more than three days from the payment due date. If not paid within the grace period, the interest will become applicable and will be calculated from the payment due date.

However, it is common for credit card companies to allow a period of 20-25 days from the end of the billing cycle until the payment due. This period is called the ‘grace period’ for credit card bill payment purposes.

5. Total amount due

As the name suggests, it is the total amount due in a billing cycle period. Apart from the transactions made in the previous billing cycle, it will also include interest applicable or any late payment charges on the previous bill, service charges, annual charges and other transactional fees.

6. Minimum amount due

It is the minimum amount the credit card holder needs to pay on his/her bill by the payment due date to avoid being charged a late fee. It is a percentage of the outstanding amount (typically 5%) or the lowest amount (Rs 200 for example) that needs to be paid for late fees to be avoided.

It is important to understand that if the cardholder only pays the minimum amount due, interest will start accruing on the outstanding amount until it has been settled in full. The only respite from paying the minimum amount due is a waiver of late fee.

If a cardholder continues to pay only the minimum amount due, he/she will fall into a debt trap as interest on the unpaid amount becomes due instantly. Therefore, it is advisable to ignore the minimum amount due and pay the “total amount due” if possible.

1. Statement date

This is the date when your credit card statement is generated. The date is important in the calculation of late payment fee.

In case you miss out on paying your dues, you will be charged interest on the amount due and this interest calculation takes your statement date into account.

The interest will be calculated taking the statement date as the first day.

2. Payment due date

This is the date by which your bank expects to receive payment on the billed amount without additional charges. It is not the date on which payment needs to be made.

In fact, a credit card user must avoid postponing payment due dates as there could be a lag in the payment made and the lender receiving the payment.

For example, if the credit card bill payment was made using a cheque, it could take 2-3 days for clearance. It is, therefore, wise to deposit the cheque at least a week before the payment due date to avoid delay in payments due to bank holidays or other unforeseen circumstances.

3. Billing cycle

It is the period between two consecutive statement dates, which is generally a 30-day period. A billing cycle is a period for which the statement is generated.

All transactions made using your credit card during this billing period will be reflected in the statement. It will also reflect interest penalty and late payment fee (if any), as well as amount received towards payment of the bill or any returns on failed transactions during the period.

4. Grace period

As per RBI rules, banks can impose late payment charges on a card only if the amount due is not paid for more than three days from the payment due date. If not paid within the grace period, the interest will become applicable and will be calculated from the payment due date.

However, it is common for credit card companies to allow a period of 20-25 days from the end of the billing cycle until the payment due. This period is called the ‘grace period’ for credit card bill payment purposes.

5. Total amount due

As the name suggests, it is the total amount due in a billing cycle period. Apart from the transactions made in the previous billing cycle, it will also include interest applicable or any late payment charges on the previous bill, service charges, annual charges and other transactional fees.

6. Minimum amount due

It is the minimum amount the credit card holder needs to pay on his/her bill by the payment due date to avoid being charged a late fee. It is a percentage of the outstanding amount (typically 5%) or the lowest amount (Rs 200 for example) that needs to be paid for late fees to be avoided.

It is important to understand that if the cardholder only pays the minimum amount due, interest will start accruing on the outstanding amount until it has been settled in full. The only respite from paying the minimum amount due is a waiver of late fee.

If a cardholder continues to pay only the minimum amount due, he/she will fall into a debt trap as interest on the unpaid amount becomes due instantly. Therefore, it is advisable to ignore the minimum amount due and pay the “total amount due” if possible.

There is now a new chance to invest in the Pradhan Mantri Vaya Vandana Yojana (PMVVY) for senior citizens seeking regular income, safety and fair returns as the scheme has now been extended till March 31, 2023. With a current interest rate of 7.4% (revised on a yearly basis) which is reduced from 8 per cent if we compared to the previous year, PMVVY is open till March 31, 2021. Considering the sovereign security and the lucrative interest rate by small-savings schemes and FDs of small finance banks, you need to take serious care of it.