Understanding your Credit Card Statement

4th April 2011

Your credit card statement is a guide to your credit card. It basically tells you everything you need to know about your account since the last time you saw the statement. It tells you the total amount you owe to the credit card company, interest owed when you have borrowed and the minimum repayment you will need to make for that month. Not only that, your credit card statement will also include information concerning all the transactions made during that month.

With the development of the internet, many major credit card companies also offer customers the option of viewing their credit card statement online while they are updated daily. We have detailed some of the common terms and features you will find in your credit card statement:

Outstanding Balance. This is the total amount you owe.
Minimum Payment. Most credit card companies insist for you to pay at least a certain minimum repayment per month if you owe them any money. It is not recommended to pay only the minimum amount as it will take longer to pay off your debt and the interest will cost you more.
Your cards APR. APR (Annual Percentage Rate) gives you a general idea of how much it will cost you to borrow on your credit card over a year. It is a good way to compare the price of different cards as generally the lower the APR the less interest you will have to pay.
Payment Due Date. This is the due date by which you must pay at least the minimum repayment. If you miss this date, you may be charged a penalty fee and interest will be charged on the outstanding balance.
Interest rates and charges. These are the interest rates and charges you will have to pay on different types of borrowing. Examples of the types of borrowing include the interest rate of purchases or when you withdrew money from an ATM machine which may also have additional charges.
Allocation of payments. This is simply the order in which your payments are used to reduce or pay off different kinds of borrowing. Different types of transactions incur different level of interest and therefore it is extremely important for you to understand which part of the outstanding balance will be paid off first when you make your repayment.
The summary box. This is a standard feature to present the key features of your credit card. This is shown on all credit card statements as part of a marketing tool used by the bank. On your credit card statement, it instantly reminds you of the key features of the card and the charges related to the use of the card. The summary box is also commonly used to compare different products.

A word of advice, always check your statement thoroughly every month against your receipts for items you did not purchase or have no idea about, or which may have been debited incorrectly. The monthly statement is also a useful reminder of the terms and conditions for using the credit card.

Lastly, if you have read your credit card statement and think you will have difficulties in paying what you owe, then it is strongly advised for you to take action straight away. Never ignore debt problems. Especially a credit card debt problem because credit cards carry high interest rates and charges if you do not meet the minimum repayment. The very first option is to talk directly to your credit card company. The earlier you get in touch, the easier it will be for them to help you.