Each month the issuing bank of the credit card sends a Statement of Account that summarizes the purchases, cash withdrawals , commissions and payments made on credit from the initial cut-off date to the final cut-off date.
Likewise, the deadline to make the payment is indicated , the minimum amount to be settled on the payment date and the amount to be paid to avoid paying interest, among other informative data. Here is an example of a statement:
So that there is no confusion, here we show you the concepts that you can find in your Account Statement , so that you know how a credit card works and be very careful when interpreting them:
- Minimum payment: It is determined by taking a fixed percentage of the balance owed as of the cut-off date. The minimum payment fluctuates between 5% and 10% of the balance owed and is the minimum amount that you will have to cover so that your credit remains current. However, it is good practice to pay off either the total debt or an amount greater than the minimum payment to prevent the debt from increasing considerably with the collection of financing interest.
- Cut-off Date: Day of the month that the bank takes to calculate your debt , minimum payment and interest, which appear on your Account Statement. For example, if the cut-off date is the 30th of each month, the Account Statement will show all the consumptions that you have made with the card from the 1st to the 30th of the current month, the balances will be added to those consumptions above and the minimum payment and interest to be paid willbe calculated.
- Credit Limit: It is the maximum credit limit granted by the bank and that you can use on your Credit Card. It is determined by your income and your ability to pay (income minus your obligations) and is assigned when the card is contracted. The bank may make adjustments to the line according to user behavior.
- Balance at Court: It is the amount owed updated as of the court date (when the account statement is issued). Any subsequent transaction will be included in the next account statement. It is the result of adding your previous balance, your purchases made during the month and subtracting the payments made in the period.
- Payment not to generate interest: It is the amount you have to pay to avoid financing charges , if you do not have a previous balance, it will coincide with the total purchases made during the month. When you settle this amount, you will have used the financing of the card from the previous cut-off date to the current cut-off date without paying interest.