Besides interest rates and how to use credit cards, the concept of credit card balance is also of interest to many customers.
What is credit card balance?
The nature of a credit card is to spend first and pay later. The bank will provide an amount within the card limit for the customer to use first and must pay it back on the monthly payment due date.
Therefore, it can be understood that the amount spent by card, interest and fees (if any) is the credit card debt balance that the cardholder must pay to the bank.
Concepts related to credit card debt
- Credit card closing balance : This is the amount of money the customer has spent on the card up to the time of that statement period. The cardholder is obliged to repay this amount within the specified time. After repaying the entire amount on time, the closing balance will be 0.
- Available credit card balance: This is the remaining amount that the customer is allowed to use to pay for expenses or withdraw cash from the credit card.
- Credit card provisional balance: This is the amount of money that needs to be paid, which is provisionally calculated when the credit card statement period coincides with holidays or Tet. The purpose of this provisional calculation is to help customers plan to pay early, reducing the possibility of overdue debt and having to pay additional unwanted penalties.
Credit card debt classification
According to the regulations of the National Credit Information Center (CIC), credit card debt is divided into the following 5 groups:
Group 1: Eligible loans
Eligible debt includes debt that is likely to be collected on time (both principal and interest). Debt that is within the term and debt that is overdue but less than 10 days are still classified in this group.
Group 2: Outstanding debt that needs attention
Including debts overdue from 10 days to less than 30 days, debts that need to be restructured for the first time.
Group 3: Substandard debt
Including debts overdue from 30 - 90 days, debts that need to be restructured for the first time, overdue less than 30 days according to the repayment term and have been restructured for the first time; debts considered for exemption or reduction of interest because the customer does not have enough financial capacity to pay according to the original credit contract.
Group 4: Doubtful debt group
Including debts overdue from 90 days to less than 180 days, debts with restructured repayment terms for the first time overdue from 30 days to less than 90 days according to the first restructured repayment term, debts with restructured repayment terms for the second time.
Group 5: Group of outstanding loans at risk of losing capital
Including debts with overdue period of more than 180 days; debts that need to be restructured for the first time, overdue for more than 90 days according to the repayment period and have been restructured for the first time; debts that need to be considered for restructuring for the second time but are still overdue; debts that need to be considered for restructuring for the third time or more.
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