Cheat sheet: Understanding your first credit card statement

If you’re new to the Credit Card scene, trying to decipher your monthly statements can feel like a hassle. And running to your parents might not be something you want to do. So, while understanding your monthly statement might not be fun, it’s actually important when you’re trying to keep a tight budget and a sweet credit score.


That’s because the information on your monthly Credit Card statements (once you know how to read it) can help you avoid late charges, keep track of your spending, and more. So grab a latte, things are about to get interesting.

When and what do I have to pay?

Most monthly Credit Card statements (regardless of the issuer) contain the same essential information, they just look slightly different. So when it comes to what you have to pay there are 3 things you should know.

What is this word — Balance?

This is the total amount you owe. Everything. All of it. This amount will include any fees and interest.

What’s the deal with the Minimum Payment Amount?

You might not be able to pay down the entire balance on your Credit Card, so you need to look for the Minimum Payment Amount. This is the smallest amount you have to pay by the payment due date if you want to keep a good credit score. It’s important to know that making your Minimum Payment Amount doesn’t mean you won’t get charged interest on the remaining balance. Nope. Can you pay more than the Minimum Payment Amount? Even pay the Balance in full? Amazing! Do it.

Why is the payment due date so important?

This is the date that your payment is due. If you can only make the minimum payment amount, you still have to pay it by this date.

Pro tip: Set up a reminder on your phone on a monthly basis to make sure you pay on time.

Is that really how many charges I made on my card?

Usually the biggest section of your statement lists all the transactions you made that month including any cash advances, fees and interest. Make sure you check this listing for any suspicious charges. It’s also your chance to take a look at your spending habits and see if you’re spending an affordable amount each month.

What are all these interest charges?

When you signed up for your Credit Card you were given an annual interest rate that applies to your purchases and another annual interest rate that applies to any cash advances you made. The purchase interest rate will apply to any purchases you make if you do not pay your balance in full by the payment due date. The cash advance interest rate will apply to any cash advances you make on your card from the moment you make the cash advance. There is no interest free grace period for cash advances.

Long story short—if you made a purchase of $250 worth of school supplies and you don’t pay your balance in full by the payment due date, you will be charged interest on that $250 purchase.

Pay close attention to the interest rate section because it will break down the interest charges based on your purchases and cash advances.

Why am I getting rewards?

If you signed up for a rewards card, your statement will include a section that highlights how many rewards you’ve earned during the monthly statement period. Watch them add up!

Will I ever pay off this balance?

While you’re in school, money is tight so you might only have the funds to make the Minimum Payment Amount. It’s important to take note of the section that tells you how long it will take to pay off your current balance if you only pay the Minimum Payment Amount each month. This might help motivate you to be more careful with your spending habits.