CREDIT CARDS

How Much Interest Am I Charged On My Card?

How Much Interest Am I Charged On My Card?

What fees are charged on your Credit Card?

Interest

When a Credit Card bill is not paid in full, or if any cash were drawn from the card account, it would attract some interest charges calculated from the date of the transaction until the date of settlement. The rate of interest charged is given in your Credit Card statement as a monthly rate and/or as an Annual Percentage Rate (APR). The APR is the cost of credit, which can be dynamic or fixed.

Balance

Adding your daily balances during the billing period, and dividing it by the number of days in that specific time, gives you your Average Daily Balance.

When the payments you make are subtracted from your balance at the beginning of the billing period, you get your Adjusted Balance. Through this, you pay less interest.

Previous Balance refers to your balance at the beginning of the billing period. Purchases or payments made subsequently are not included. On the other hand, the Ending Balance is your balance at the end of a billing period. Needless to say, it includes all purchases and payments during the billing period.

Fees

Some Credit Cards have Annual fees - the yearly cost of owning a Credit Card. This will be added to your balance when you get your Credit Card, and every following year subsequently, at the same time.

When a payment does not reach the card company on time, Late Fees are charged. This is entirely avoidable, as late payments can harm your credit history, making it harder to get credit in the future. Make sure your payments are made on time. Check out the online payment option, which usually posts your payment to your account within 24 hours.

Other fees can include charges when a credit limit is exceeded, when payments are returned, or even for requests to stop payment. Most of these can be avoided.

Call your card issuer if you have any more questions about fees.

Understand your Credit Card statement

Roll your mouse over the numbers to learn more about the various sections of your statement.

Some Terms that you should know

1. What is the difference between account balance and minimum amount due?

Your Account Balance is your total account debt as of the statement date, which includes any unpaid balances, new purchases, cash advances, apart from other charges such as fees and charges. Your Minimum Amount Due is the absolute minimum you must pay and the date by which you must pay it to keep your account current. It is a good idea to always try and pay back substantially more than your minimum due. This will help open up your spending limit and improve your credit rating.

2. What is a cash advance?

A cash advance is a short-term loan. This will have a one-time transaction fee (sometimes as much as 3% of the advance) in addition to finance charges that start to accrue immediately. The APR (Annual Percentage Rate) for cash advances is often higher than for purchases. It is therefore not a good idea to use cash advances to meet ordinary living expenses, to buy now rather than wait, to make a down payment or to pay other Credit Card bills. By the time you get your bill, you will owe more than you advanced yourself in cash!

3. How do I get a cash advance?

  • At a bank: With your card, you can charge a cash advance at virtually any bank, the world over.
  • Through an ATM: With your card and your personal identification number (PIN), you can request a cash advance at an automated teller machine (ATM), anytime, anywhere!
  • With a cheque: Many Credit Card issuers provide special "convenience" cheques to their customers to use when paying with their card is not an option.

4. What is a grace period?

The grace period is the number of days you have to pay your bill in full without triggering any interest. For example, the Credit Card company may say that you have "25 days from the statement date, provided you paid your previous balance in full by the due date." The grace period usually applies only to new purchases, and not for cash advances or balance transfers. Instead, interest charges start right away.

If you have carried over any balance from the preceding month, you may not have a grace period for new purchases. Instead, you may be charged interest as soon as you make a purchase (in addition to being charged interest on the earlier balance you have not paid off).

5. What is a Credit Report / Credit Score?

A credit report is based on your credit history-that is, whether or not you have paid your bills on time. This information, gathered from banks and other creditors, includes monthly Credit Card and loan payment information. A credit score helps predict how creditworthy you are - how likely it is that you would repay a loan and make payments when due.

What are Credit Information Companies?

The Reserve Bank of India (RBI) mandates all banks and other credit institutions to be members of at least one Credit Information Company (CICs). At present, Citibank is a member of CIBIL TU, Experian, Equifax & CRIF-Highmark Credit bureaus.

The establishment of CICs is an initiative of the Government of India and the Reserve Bank of India (RBI), to improve functionality and stability of the Indian financial system, by containing NPAs while improving credit grantors portfolio quality.

Customer Information shared by financial institutions

All banks and financial institutions are required to share credit information like sanctioned amount, payment history, etc. along with demographic details of all customers with CICs. This is part of the agreement signed by the customer when the credit facility is opened. This information is shared regularly to keep the credit record updated.

Role of Credit Information Companies (CICs)

CICs are repository of information shared by banks, NBFC etc. and they collect, maintain and provide credit information on all borrowers. It does not provide and opinion, indication or comment pertaining to whether credit should or should not be granted. The credit grantors, who have received an application for credit, take the credit decisions.

Responsibility of Customers

It is in the best interest of customers to maintain a good credit history by paying the necessary dues in a timely manner. With a fair credit history, responsible customers can expect faster and more competitive financial services at better terms from credit grantors.

What happens when I don't pay your bills on time?

If you decide to revolve credit, or carry forward a balance, the Credit Card company levies interest charges on the unpaid balance from the payment due date until you make the payment. The rate of interest charged is given as a monthly rate and/or as Annual Percentage Rate (APR), which can be verified in your Credit Card statement. The APR is the cost of credit, and can be dynamic or fixed.

For example, if you have only made a part payment in February, the total amount billed on 17th March is Rs.5,000, you make a payment of Rs.2,000 on 25th March and you make a purchase for Rs.1,000 on 30th March, if you make no further payment on your card till 17th April, interest will be levied as follows (reference example only. For actual interest rates, please contact your creditor):

Balance Amount Dates No. of Days Calculation Interest
Rs.5,000 17 - 25 March 8 (38.28/365)*8*5,000/100 Rs.41.95
Rs.3,000 25 - 30 March 5 (38.28/365)*5*3,000/100 Rs.15.73
Rs.4,000 30 March - 17 April 18 (38.28/365)*18*4,000/100 Rs.75.51
Total Interest charged Rs.133.19

NOTE : If you spend Rs.5,000 and you pay back only the minimum amount due every month, then it may result in repayment stretching over 6 years! So, whenever possible, pay back substantially more than your minimum due, which would open up your spending limit & improve your credit rating.

- If at least the minimum amount due is not paid by the payment due date, a late fee would be included in your next statement. Make sure your payments arrive on time. Explore online payment options which are much quicker.

What must you do if there are errors on your Credit Card statement?

Read your Credit Card statement carefully and check all the transactions that you have been billed for. If there is a dispute, you must inform your Credit Card company within 30 days of receipt of the Statement, failing which it would be construed that all charges and the Statement are entirely in order and accepted by you.

You need to file a 'Cardmember Declaration Form' (CDF) providing details of the disputed transactions. Click here to view the CDF.

If you are a Citibank Credit Card customer, you can download the CDF from our website:

  • Visit www.citibank.com/india
  • Click on "Customer Service" tab
  • Click on "Download Forms"
  • Click on "Cardmember Declaration Form" to download the form in PDF format.

You need to fill up the form and courier it to the following address:

Citibank N.A.
No.2, Club House Road,
Chennai - 600 002.

Once the Credit Card company receives any such information, it would reverse the disputed charges temporarily. After investigating the matter, if the card issuer ascertains that you have not undertaken the transaction, the charges would be permanently reversed. But if it is found that the transaction was genuine and has been rightly billed, the charges would be reinstated and a fine of Rs.100 levied.

You have a time frame of about 60 days to inform the Credit Card company of issues, complaints or grievances, from the date of the event.

Prevent fraud on your Credit Card

Credit Card, ATM and Internet fraud can often be prevented. Most thieves use stolen Credit Cards within 48 hours. Call your Credit Card company immediately to report a lost card. Most companies have a 24-hour toll-free number.

Keeping your credit safe

  • Always know where your cards are and keep them in a safe place
  • Do not give your account number over the phone unless you know the company and you made the call
  • Get a card that has added security features, like a photograph
  • Draw a line through the blank space above the total on charge slips to prevent changes and tear up carbons from slips
  • Do not sign blank charge slips
  • Always check receipts against your monthly statements. Errors must be reported within 30 days of the statement mailing date
  • Record card numbers, expiration dates and phone numbers. Keep this record in a safe place separate from your cards. Use it if you need to report lost or stolen cards
  • Never put your account number or personal identification number (PIN) on the outside of an envelope or postcard. Never put your PIN on the card or in your wallet
  • Carry only the cards you need, especially when traveling.

The Internet

Shopping on the Internet has become a multi-million dollar business. Most Internet sales are safe, but as Internet purchases have increased, so have incidents of online Credit Card fraud. There are, however, several steps you can take to reduce the likelihood of becoming a victim of online Credit Card fraud.

  • Try to deal only with reputable companies. Make sure the web site you access has a physical address and a phone number you can call for additional information.
  • Shop at sites that offer secure ordering. Most major Internet shopping sites take security precautions. While on the checkout page of a shopping site, see if the site uses a secure server before you give out your Credit Card information. If the URL (web address) starts with "https://" then the site uses a secure server.
  • Be sure to deal with companies that post their privacy policy on their web sites and read the privacy policy. While some web sites may ask for personal information, the only information a merchant needs to process an order is the name on the card, the Credit Card number and the expiration date.