The Easy Guide to Reading your Credit Card Statement
21 Dec 2009 Tell a Friend
Let's face it, credit card statements are not the kind of thing anyone looks forward to receiving in the post. Especially after a particularly expensive month it is tempting to slide them under the doormat/pop them in a drawer/feed them to the cat and pretend to have not seen them. However, you should never, ever ignore them, because you are costing yourself serious amounts of money by doing this.
Once you know what to look for on your statements, they are actually fairly simple to read. The trick is to open and pay each one as soon as it arrives (or as soon as you have the available cash), because this means that the credit card provider doesn't make any more money from you than absolutely necessary. Here is a Plain English guide to the terms used in your credit card statement, so that you can easily see what you owe and how the charges break down, and check over the statement for potential errors and overcharges.
Current Balance: This is the total amount that you have spent on your card. This will not just show the amount for the past month, but will include all spending on the card that has not been paid off.
Previous Balance: The amount that you owed in total last month. If you paid off the balance, or just some of the balance, this will usually be acknowledged on the statement with the phrase 'Payment received, thank you' and the date the payment was received.
Credit limit: This is the total amount that the credit card company has allowed you to spend on your card. You need to subtract your Current Balance from this credit limit to see what credit you have available. For example if your credit limit is £2,000 and you have a current balance of £1,500, you have £500 left to spend. Going over this limit will cost you a hefty fee, so keep a close eye on your limit.
Watch out for any letters from your credit card company informing you that they have raised your credit limit without you having asked for this to be done. This happens when the card companies want to encourage you to spend more on your card. If you get your limit raised, call and get it immediately reduced again. You don't need that kind of temptation.
Payment Due Date: Do remember that if the payment is due by this date, you need to have paid earlier than this. To be on the safe side and avoid a possible late payment fee, make your payment at least 3-5 working days before it is due. This gives the money time to settle in the credit card company's account.
If you make a payment later than the due date, you will be charged a fee. The size of the fee depends on the credit card provider, but it's usually quite large. If you have a reasonable explanation for why the payment is late, call and let the company know and they might waive the fee (in which case it would appear on your next statement as a credit).