The credit card application is straightforward and fairly easy for most people to complete. Using the
card is easy too - just swipe and sign. Next comes the consumer credit card statement and that stops some
people in their tracks.
At first glance, it may be confusing - but not if you understand the terms used on that statement.
None of this is a surprise. All of the terms and conditions - as well as the annual percentage rate (APR)
- were disclosed to you in the application. Did you read it?
If not, now you know why it was important. Here are the major terms you will find on your credit card
statement, so that you can quickly decipher your monthly bill:
APR - the Annual Percentage Rate is what you pay on the balance you owe to the credit card company.
Some cards have a fixed APR and others have a variable APR. The variable APR means that the bank or
financial institution can change the rate at any time without warning.
This is a way to penalize deadbeats. Fail to make a payment or not make the minimum payment and your
APR can go from 12 percent to upwards of 22 percent without warning - and there's nothing you can do
about it, since you signed on the dotted line agreeing to this term.
Due date - This is the date that the payment must be received. Please do not even bother to blame the
post office: if your payment arrives even one day late, there is no grace period. Late is late, and late
is costly.
Find out the date of the credit card billing cycle. Choose a cycle that coincides with your paycheck,
so you know you will have money for the payment. You can find a credit card company that lets you choose
the billing cycle date when you fill out the initial application. Most companies let you change the
billing date, while others do not.
Minimum Payment - This is the least you can pay to stay current with your credit card debt. If the
amount is $21, then send exactly that amount or round up to $25. Do not send $20, or you will not get
credited with making the minimum payment. Even a minor dollar difference counts here.
Credit limit - Printed on each monthly statement, the credit limit is the maximum amount that you are
approved to charge. This amount is based on your credit history and may be increased periodically if you
pay promptly.
Spending over your credit limit may result in your charge being denied or you can be penalized a large
fee for the overcharge amount. Either way, its going to cost you too much for that mistake.
Reward or Bonus Points - These points accrue based on a formula that is related to your spending. For
example, you might get one reward point for every ten dollars you spend. The points will be tracked on
your monthly statement as a running total. Any points used will be subtracted from the total.
If there are any other terms that you do not understand, call your credit card company or refer to the
initial agreement you signed to see if you can find out what it means. who wants to pay unnecessary
charges?
