Decoding Your Credit Card Statement
Understanding the fine print can help you get in charge of your credit card
Credit card debts in Canada are at all-time highs, with TransUnion reporting that the average Canadian credit card user owes nearly $4000. Over-spending can lead credit users down a dangerous path, and it is only made worse when they fail to fully understand their credit card statement.
Many of us have been there – looking at our credit card statements each month with nothing but a baffled stare. Understanding the ins-and-outs of your credit card statement will empower you to make the most of your payments and also avoid any pitfalls that come from confusion.
Consolidated Credit has put together the following guide to help you decode your credit card statement. If you still have questions, give us a call at and a trained credit counsellor can help you out by offering advice and assessing your financial situation free of charge. If you prefer doing it online, you can get started by trying our Free Debt Analysis.
AIR (annual interest rate) / APR (annual percentage rate)
AIR and APR both refer to the interest charged to your account annually; you may see either term on your statement, depending on what credit card you use. Dividing your APR by 12 will give you your monthly interest rate – if your APR is 18 per cent, your monthly interest charges are 1.5 per cent.
Be aware that there may be a different APR depending on the type of transaction; cash advances sometimes have different charges from standard purchases.
Minimum Payment Due
Your minimum payment is the amount that you must pay each month to stay current with your credit card bill. It is calculated by a formula laid out in your original credit card contract, and is a percentage (often 2 to 5 per cent) of your total balance.
It is important to note that the minimum payments typically do very little to reduce your actual principal balance. Much of it goes toward paying your interest charges, meaning your balance is largely unaffected. If you want to pay off your bill within the next decade(s), make sure you pay more than the minimum!
Payment Period Remaining
Many credit cards include a box at the bottom of your statement that states how long it will take to pay off your full balance if you only make the minimum payments. Some credit cards even include a projection of what the total cost will be – and it will probably shock you. This section really emphasizes the importance of paying more than the minimum requirements.
Don’t simply skip to the bottom line – review your balance summary with a fine-tooth comb. Pay special attention to any fees or finance charges applied to your account. A fee that is buried in the fine print can cause financial headaches down the road.
- The Fees:
- Annual fee. This is what you pay the credit card company each year to keep your account open. It may be paid once per year, or spread out over 12 months. Not all credit cards have annual fees.
- Over-limit fee. When you go over your credit limit, you incur an over-limit fee. This fee may be applied in addition to a penalty AIR/APR rate that also gets applied to your debts. The over-limit fee is usually applied once, while a penalty interest rate may be applied to an account for a period of six months or more, depending on which credit card company issued the card.
- Cash advance fee. If you take out cash advances on your credit card, you will see an additional fee. Keep in mind that your card may apply a higher rate to cash advances compared to normal transactions.
- Balance transfer fee. Like cash advances, balance transfers may incur extra charges or have higher interest rates. It is especially important to pay attention to these rates if you’re thinking about using a balance transfer fee as a do-it-yourself debt solution.
Some credit card statements include a line for finance charges. This refers to the interest applied to the current balance on your account. It’s the amount of interest that you’re paying toward the interest accrued that month. The charges are calculated based on the Periodic Interest Rate, which may refer to the monthly conversion of your Annual Percentage rate (see above). These numbers will give you a good idea of how much your credit is costing you.
The grace period refers to the number of days that you have before finance charges are applied to your account. If you pay off the debt in-full before the end of the grace period, finance charges will not be applied to your account and you’ll effectively avoid paying interest. This will save you a lot of money and it will keep your credit card debt under control. If you have the money to do it, keeping a zero balance is absolutely worth it.
It’s worth noting that grace periods typically only apply to regular transactions and not cash advances or balance transfers. Check the fine print on your statement to confirm this.
A lot of the fine print on the back of your statement details the steps you should take if your card is lost or stolen, including the phone number that you should call as soon as you notice your card is missing.
It may also include your cardholder agreement or a disclosure statement that details how charges made on lost or stolen cards will be handled. In general, you will be covered if you contact the credit card company before any fraudulent charges occur. It is worth checking to see the exact protocol so that you are completely protected.
If hidden fees or other complexities of your credit card contracts have caused problems for you, contact Consolidated Credit at to discuss your options for debt relief with a trained credit counsellor. If you prefer, you can take the first step online by completing a request for a Free Debt Analysis.