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Must Know Credit Card Definitions

Credit Card bills can be intimidating, not just because of the big bills but also because of those big terminologies you often come across in it.

Relax, help is just ahead.

Here’s a list of commonly used credit card terms and definitions. Knowing these will help you reduce hassles, especially while trying to understand what every definition means. 

  1. Account number or credit card number – is the number that is embossed on your card, and also printed in the bill

  1. Joining fee – is the charge levied while purchasing a credit card

  1. Annual Fee – is the yearly fee charged.

  1. Card-member agreement – spells out the terms and conditions put forth by the card issuer which is duly signed by the card holder.

  1. Payment Due Date – It is the due date by which the current month’s bill needs to be paid. If not the entire amount, at least the minimum amount due must be paid to avoid any additional delay charges.

  1. Credit Limit – It is the maximum limit upto which you can avail credit by swiping your card. This will definitely help during the times when you are short on cash.

  1. Previous Balance – This is the balance from your previous unpaid bills.

  1. Available cash limit – this is the maximum value which you can withdraw from your credit card.

  1. Minimum amount due –  this is the  minimum amount which should be compulsorily paid. It is 5% (or less), of the total outstanding.

  1. Statement date – is the complete list of purchases you have made in the past 30 days using your credit card.

  1. Cash advance – is the amount you withdraw against your credit card after you exceed the cash limit for the current month.

  1. Total amount due – is the sum of the current balance and previous month’s balance.

  1. Reward points – redeemable points given as per purchases made. You can use these points to purchase something else or avail other benefits.

The facilities you can avail using your credit card depend on your spending habits, promptness in paying the bills and also the type of card you have availed. If used with caution, credit cards are certainly a useful spending tool. 

Another important aspect is that, having a credit card and using it wisely will help in maintaining a good cibil score in turn making you ideal for availing a loan in future.

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