What is credit card debt?

Besides interest rates and how to use credit cards, the concept of credit card debt is also of great interest to many customers.

What is credit card debt?

The nature of a credit card is that you spend now and pay later; the bank will grant you a certain amount of money within your credit limit to use upfront, which you must repay by the monthly payment deadline.

Therefore, the amount spent using the card, along with interest and fees (if any), can be understood as the outstanding credit card balance that the cardholder must pay to the bank.

The concept related to credit card debt.

But Credit card balance at the end of the billing period : This is the amount of money the customer has spent using the card up to the time of that statement period. The cardholder is obligated to repay this amount within the specified time. After repaying the entire amount on time, the balance at the end of the billing period will be zero.

But Credit card balance: This is the remaining amount that customers are allowed to use to pay for expenses or withdraw cash from their credit card.

But Estimated credit card balance: This is an estimated payment amount when your credit card statement coincides with holidays. The purpose of this estimate is to help customers plan their payments early, reducing the likelihood of overdue debt and unexpected penalty fees.

Credit card debt classification

According to the regulations of the National Credit Information Center (CIC), credit card debt is classified into the following five groups:

Group 1: Eligible outstanding loans

Eligible loans include those that are likely to be collected on time (both principal and interest). Loans that are still within their due date and those that are overdue but less than 10 days are also included in this category.

Group 2: Outstanding debts requiring attention

This includes debts that are overdue from 10 days to less than 30 days, and those that require restructuring for the first time.

Group 3: Substandard loans

This includes debts overdue for 30-90 days; debts requiring restructuring for the first time that are overdue for less than 30 days according to the repayment schedule and have already been restructured for the first time; and debts for which interest has been waived or reduced due to the customer's inability to make payments according to the original credit agreement.

Group 4: Doubtful outstanding loans

This includes debts overdue from 90 days to less than 180 days, debts restructured for the first time that are overdue from 30 days to less than 90 days according to the initially restructured repayment schedule, and debts restructured for the second time.

Group 5: Loans at risk of default.

This includes debts that are overdue for more than 180 days; debts requiring initial restructuring that are overdue for more than 90 days according to the repayment schedule and have already been restructured once; debts requiring consideration for a second restructuring that are still overdue; and debts requiring consideration for a third or subsequent restructuring.

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