Your credit card statement is more than just finding out the bills you have to pay. It is important for you to understand all the details contained in the monthly report you receive. Here's a quick explanation and guidance for credit card owners on how to read a credit card statement.
Unlike your monthly water or electricity bill, your credit card bill can look pretty confusing. That’s because it includes a number of factors: your statement date, your interest rate, your owing, your outstanding balance… the list goes on!
So if you’re a little confused with how to understand your credit card statement, don’t feel bad - you’re not the only one.
In this article, we’ll dive deeper into the elements of a credit card statement and hopefully help you understand how to make sense of it all. But first…
What is a credit card statement?
And what does a credit card statement look like? It’s basically a detailed billing information of your credit card usage with multiple pages of black and white text, sent to you by your bank or credit card issuer once a month.
They used to come right into our mailboxes, but most banks have now moved to e-statements which you can download online or have them sent to your email inbox.
These statements must also adhere to Bank Negara’s rules:
(a) An issuer shall provide a monthly statement to a cardholder indicating the outstanding balance, the minimum repayment, the amount credited and charged, including interest and other non-interest charges, and the dates when those amounts were posted to the account;
(b) An issuer shall provide a minimum payment warning statement (in a box, 12-point font and bold) on the front page of the monthly statement (refer to the sample in Appendix 1). An issuer shall advise a cardholder to use the calculator available on the issuer’s website to compute the length of time it would take to fully settle the balance outstanding based on different repayment amounts. On the back page of the monthly statement, an issuer shall provide a standard illustrative example as per the format in Appendix 2;
(c) The back page of the monthly statement shall also, at the minimum, disclose the information in a standard table as set out in Appendix 3. This information shall be clearly visible (i.e. shall not be in light shade and less than 8-point font size);
(d) An issuer shall inform a cardholder on the front page of the last statement of the year, of the length of time it would take to fully settle the cardholder’s actual existing balance outstanding and the total interest cost assuming there is no new transaction on the credit card (refer to the sample in Appendix 4);
(e) In addition to the above, the last statement of the year shall provide information on the total credit utilised, total interest cost, and total charges imposed to encourage prudent use of the credit card; and
(f) For a cardholder who opts to receive e-statements, an issuer shall ensure that the information on the e-statement is the same as the hardcopy statement.
In a nutshell, these statements usually include:
- Your outstanding balance
- Your minimum repayment
- The amount credited and charged - including interest and non-interest charges
- The dates for when those amounts were charged to your card
The other pages where words are printed in a teeny tiny font size are easy to gloss over, but do take the time to read them as they’re actually really helpful in guiding you in your repayment. They also include some helpful illustrations of how your debt can grow if you don’t pay off your balance.
Depending on your card, it can also include your rewards points and expiry. And, of course, some marketing materials on the bank’s latest promo.
Credit card statement terms - explained
To know how to read your credit card statement, you must understand what these important terms mean.
Statement Date - Date of the month as determined by the Bank to be the date of the Statement of Account. Statement is generated and all transactions made from the last Statement Date to the current Statement Date will be recorded in the statement.
Minimum Payment Due - The minimum amount payable.
Payment Due Date - The date payment is due, which is the expiry date of a twenty-day period from the Statement Date.
Combined Credit Limit - Total credit limit of all the credit limits for all the credit cards you own with the bank.
Previous Balance - The total balance due at the end of the previous statement cycle.
Credit / Payment - Total amount credited into your account and/or any payments made.
Debit / Fees - Total amount debited from account and/or any fees incurred to the account.
Retail Purchase - All transactions for the purchase of goods and/or services incurred using VISA/MASTERCARD for this statement cycle.
Cash Advance - Amount of disbursement of cash from the VISA/MASTERCARD account.
Total Balance Due - Total amount payable which includes previous balance, new transactions, cash advance and fees/charges incurred.
Transaction Date - Dates of transactions performed for this statement cycle.
Transaction Description - Details of transactions performed for this statement cycle.
Transaction Amount - Amount of all transactions including retail purchases, previous balance, fees and charges incurred.
To read your statement, you should first look at the Statement Date and Payment Due Date to ensure that you’re not too late in your repayment. (Remember, you need to pay before your due date!) Check on your account number and details to ensure that it is indeed the correct card.
Then, go line-by-line to check on what you’ve been charged for, and what has been debited into your account. Make sure that all is in order, and call your bank if you find that something is amiss.
Then, check on your reward points and/or cashback, which may be located towards the end of the page. It’s always beneficial to use a credit card when you spend, because you’ll always get rewarded for it. Just remember to pay off your balances in full and not to spend outside your limits!
Why should you check your credit card statement each month?
Thanks to technology, we can now easily check our credit card balances and transaction histories through our banking mobile apps. They appear easily on our apps, meaning we don’t have to hunt for them in some obscure corner. However, it may not be a good idea to only rely on those summaries for an accurate view on your credit card transactions.
It’s best to check your credit card statements line by line every month. This allows you to spot discrepancies, even if they are barely sizable.
If you were charged for something you did not pay for, even if it’s as little as RM1, you should immediately call your bank to check as this is one of the telltale signs of credit card identity theft. It’s common for thieves to make a discreet purchase just to test out your card before they move on to bigger things.
Your credit card statement will also help you check on instalments. We’ve heard of borrowers who took up yearly gym membership, but instead of being charged a monthly instalment, their cards were charged the full five-figure fee! If you don’t have the means to pay that off, you will likely max out your credit limit - and be penalised if you don’t pay them off the following month.