What is Outstanding Amount in a Credit Card?

Posted on Tuesday, June 4th, 2024 | By IndusInd Bank

Responsible management of credit cards is crucial for maintaining your financial health. One key aspect of credit card management is understanding the outstanding amount.

Let’s understand in detail the outstanding amount in credit cards, its implications, and how to manage it.

Outstanding Amount Meaning in Credit Card

The outstanding amount is the amount a cardholder owes to the credit card issuer at any given time. It includes all transactions made using the credit card that are not paid. This amount consists of payment for purchases, cash advances, balance transfers, interest, and fees.

Components of the Outstanding Amount in Credit Card

The outstanding amount in a credit card statement includes:

• Purchases: All transactions made using the credit card.
• Cash Advances: Any cash withdrawals made using the credit card.
• Balance Transfers: Amounts transferred from other credit card accounts.
• Interest Charges: Interest accrued on the outstanding balance.
• Fees: Any applicable fees, such as late payment fees, annual fees, etc.

These components make the total outstanding amount a cardholder needs to pay to avoid additional charges or penalties​​.

Implications of the Outstanding Amount in Credit Card

Here are a couple of implications of the credit card outstanding amount that you ought to consider.

· Impact on Credit Score

The outstanding amount has a direct impact on your credit score. A high outstanding amount increases your credit utilisation ratio. It is the ratio of your outstanding balance to your credit limit. Ideally, this ratio should be below 30%. Higher credit utilisation indicates a higher dependence on credit. Thus, it negatively affects your credit score​.

· Interest and Fees

If you fail to pay the outstanding amount in full by the due date, it results in interest charges on the remaining balance. Also, late payment fees apply if the minimum payment is not made on time. These charges can accumulate, leading to a higher overall debt​​.

Managing Your Credit Card Outstanding Amount

To manage what the current outstanding on your credit card is, consider the following strategies:

· Regular Payments

Make regular payments to keep your outstanding amount low. Paying off the entire balance each month is best to avoid interest. If full payment is not possible, at least pay more than the minimum amount due.

· Monitoring Transactions

Keep track of your spending and monitor your transactions regularly. Use online banking or mobile apps to stay updated on your credit card usage. It helps in identifying any unauthorised transactions.

· Setting Alerts

Set up alerts for due dates and payment reminders. Many banks offer SMS and email notifications to help you stay on top of your payments​​.

· Utilising EMI Options

If you have a large outstanding amount that you cannot pay immediately, consider converting it into Equated Monthly Installments (EMIs). Thus, it is manageable​ by spreading the repayment over several months. Also, its interest burden is reduced.

Also Read: What Happens When You Default on Credit Cards?

IndusInd Bank Credit Card Benefits

IndusInd Bank offers a range of offline and online credit cards tailored to meet various financial needs. These credit cards come with several benefits, such as:

• Reward points on every spend and its redemption for exciting offers.
• Cashback on specific spend categories.
• Complimentary airport lounge access and travel insurance.
• Conversion of high-value transactions into EMIs.

Understanding and managing the outstanding amount on your credit card is crucial for financial stability and a good credit score. Regular transaction monitoring, timely payments, using alerts and going for EMIs can help you avoid implications of outstanding amounts and keep credit card usage under control.

With added benefits offered by IndusInd Bank Credit Cards, managing your finances can be convenient and rewarding.

Apply now for an IndusInd Bank Credit Card today!

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.