Revolving credit product – Segregation of balances

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Accounts list in revolving credit

There are several technical accounts for a revolving credit product which each keep track of a specific amount. They are split according to two dimensions: ‘purpose’ and ‘age’.

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Split by ‘purpose’

The technical accounts which are split according to source and purpose are:

• Retail, which is used to register non-cash transactions (e.g. purchase, unique)
• Cash, which is used to register cash transactions (e.g. cash, ATM)
• Fees, which is used to register all fees (both card and account level)
• Interest, where accrued revolving credit interest is posted
• Overdue interest, where accrued overdue interest is posted
• CH Current/Credits, which is used to register incoming payments and other credits.
  

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Split by ‘age’

Technical accounts are also split according to age. There are three main age stages:

• Current, which represents the current cycle
• Grace, which is the period from billing cycle closure to due date
• Billed, which is the period after the due date.
• Overdue, which is a parallel stage to billed but for the minimum to pay balances that are not paid by the due date

Note that the split by age only applies to the following purposes: retail, cash, fees, and interest (only grace, billed and overdue). The movement of balances between technical accounts The below illustration shows a basic flow of balances during two consecutive billing cycles.

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Technical account list