As soon as you open your credit card account records are kept of all your activities. Anything you purchase using the card will go on record and a statement is provided at the end of every month to show you how your balance was arrived at.

A credit card statement is not straightforward for interpretation. It consists of figures, terms and percentages that may not make sense to the layman but are important in your credit card balance calculations. As a credit card holder you need to be able to decipher the information on your statement. This will help you understand how you are faring in terms of credit and how much credit card debt you have actually accrued.

What to expect

You will find a summary of all the transactions that have occurred during that specific billing period. These include cash advances, payments, purchases, credits, interest charges, fees and any amounts that may be past due. All these subtracted from your initial credit limit will show you your credit balance. Any other charges that are incurred after the last billing date will appear on the next credit statement.

You will find payment information including the minimum amount you should pay and when it is due and your new total balance. Under this information should be a warning about late payment and the higher interest that may be charged on it. Next follows a section that reminds the card holder how much they need to pay for them to finish the balance in three years, how long it will take you to finish the balance if paying the minimum amount and the difference between the two.

Warnings and notices

In the event that you pay your bill late or go over your credit limit, the credit card company is supposed to give you a warning and a notification on whether it will affect your interest rates. This should be done 45 days before the new rates are implemented. Any other changes should also be mentioned here 45 days before implementation.

A list of all your transactions follows next. Check this list carefully so that you find out whether there are any misplaced entries. All the fees incurred from different transactions should be listed separately and in detail. The total amount you have paid in interest charges and fees for the current year is reflected under the year-to-date totals. This figure can be reduced by prompt payment and watching how much you spend.

There should also be a summary of the interest rates charged on the different transactions and this is reflected under the interest charge calculation.