Credit Cards

Understanding Your Credit Card Statement

Finance Charges
Finance charges are also known as interest. In a nutshell, this is what you pay a lender for borrowing money from their credit card. The finance charge on your monthly credit card statement is the interest you pay on the balance of your account – that is why you should always try to keep a very low balance.

Grace Period
Your grace period is the number of days you have before you trigger a finance charge from your credit card company. Remember, study the fine print on your statement, because that is where you will find the grace period that the credit card company offers.

But keep in mind, on most credit cards the grace period only benefits those whose previous month’s balance has been paid in full. So unless you have paid your credit card in full the previous month, you probably cannot take full advantage of the grace period. Those with good credit card management enjoy more benefits from the credit card companies. And regarding cash advances using a credit card, there are no grace periods, even if the previous balance was paid in full.

Credit Card Fees
Credit card fees differ depending on the type of card that you use. Read the fine print on your monthly statement (part of good credit card management), the annual disclosure statement. Fees can jump up and bite you at the most inappropriate time, so be aware of them.

Here are a number of general fees to be conscious of:

Annual Fee - An annual fee is what you pay to have a credit card. The amount of the annual fee could vary from card to card. Some cards that offer benefits such as points may have a higher fee. But do yourself a favor and research as many cards as possible. There are cards that have no annual fee and you may be able to find a card that matches your financial needs.

Over Limit Fee – Also known as over-the-credit-limit fee. Each credit card has a credit line that is usually founded on your lender's review of your credit report. If you go over your credit limit a penalty will be assessed each time it happens. Also, keep in mind that lenders have the ability to assess an overlimit fee on the day you go over the limit. So, never count on being able to pay your balance down in time for the statement closing date. Keep your balance significantly below the credit limit at all times..

Returned Cheque Fee - If the cheque you send your credit card company bounces, they can legally charge you an additional fee for the returned cheque. Your bank may also charge your chequing account for this mistake. It is called an overdraft fee.