Only 67 per cent respondents of the 2018 National Financial Literacy Survey said that they understand the terms and conditions of their credit card, according to a survey conducted by the Centre for Strategic and Policy Studies (CSPS) and Autoriti Monetari Brunei Darussalam (AMBD).
A credit card statement shows a summary of the transactions made using the credit card during a specified billing period. When you receive your statement, it is important to read all the fine prints, terms, key numbers and dates, as well as ensuring that there are no unauthorised charges or billing errors in your statement.
To help understand credit card statement better, AMBD listed some key features:
Minimum Payment Due
This is the minimum amount required to pay on or before the payment due date in order to maintain the card account.
The minimum amount payable differs every month depending on credit card purchases.
The bank may charge a specific minimum amount, or approximately eight per cent of the total outstanding balance or whichever of the two amount is higher.
It is best to pay more than the minimum amount to avoid more interests and to shorten the repayment period. Some credit card issuers suspend the credit card account, in the event that no repayments are made.
The new balance shows the total amount that needs to be paid.
If the minimum due amount for a month or more is not paid, it will be reflected in the ‘Overdue’ section of the credit card statement. Note that the longer the duration of overdue, the higher the late fee charge will be.
However, if the payment made is more than the amount that owed, the figure will be noted as ‘CR’ meaning the extra amount that you paid will be adjusted on next month’s credit card balance.
The card’s credit limit is the maximum outstanding balance one can have on the credit card at a given time.
If the purchase items more than the credit limit, the purchases will be rejected.
For example, if the credit limit is BND1,000, the cardholder will only be able to make purchases up to that set amount.
Purchases beyond the credit limit will be rejected.
Subject to respective bank’s credit risk management, cardholders can request for a credit extension.
Note: For credit cards issued by Islamic banks, an ‘administrative fee’ will be imposed to the credit cardholders that fail to make full payment on the due date.
Credit Card Management Tips
Make repayments in full or at least pay more than the minimum amount due.
Non-repayment (also referred to as ‘being delinquent’) or being late in payment can cause a negative impact on credit history.
The bank may penalise cardholders with interest on the outstanding amount, as well as with late payment fines.
It is advisable that repayments are made in full to avoid unnecessary charges.
If the cardholder is unable to do so, it is advised that payments are made above the minimum balance to settle outstanding balances faster and to minimise any charges.
Utilise card’s loyalty points
Loyalty points are given to credit cardholders based on each dollar purchased using the credit card. For example, one point for each dollar spent.
Subject to the card issuers’ reward programme, cardholders may also be able to redeem points for gift cards, cash, or travel points. It is always best to take advantage of the reward programme.
Avoid compounding interest
Compounding interest on credit cards refers to the interest on top of the interest that is already charged on the outstanding amount, which individuals are required to pay.
The longer individuals go without repayment, the higher the compounding interest amount will be. Moreover, paying credit card bills after its due date will usually incur a late fee.
Maintain a good credit report and score
The Credit Bureau at AMBD collects, compiles and consolidates both banking and non-banking (such as utilities) information in Brunei to generate a credit report and credit score.
With these credit assessment tools, financial institutions will make credit assessment on an individuals’ loan application.
Credit cardholders with irregular repayments will be seen as high risk and will negatively impact the credit score, and this may lead financial institutions being less inclined to grant new credit facilities. It is important to keep up with repayments to maintain a good credit report and score.
Report unauthorised processes
Credit cardholders are advised to examine the details of statement carefully and to report any discrepancies to the bank within 14 days from the day of the statement.
Unless the bank is notified of the discrepancies within the given period, the details in the credit card statement shall be deemed as correct and conclusive.
Keep your card safe
Credit cardholders must take reasonable precautions to keep their cards safe, exercise care and diligence as well as not disclosing PIN to anyone.
In the event that the card is lost, stolen, compromised or its PIN disclosed, call and notify the bank immediately to block or deactivate the card as a safety measure.