Reading a Credit Card Statement
Learn to read a credit card statement for NSW Year 12 Mathematics Standard 1 (NESA outcome MST-12-S1-03). A statement shows one month of the account: the opening balance, purchases, cash advances, fees and charges, payments and the closing balance you still owe.
You will make sense of each part of a statement, find the closing balance or a missing line, calculate the minimum payment, read the payment due date and see what happens if you pay only the minimum each month — why the debt falls very slowly and keeps being charged interest. A key skill for managing your own money.
Theory
A credit card statement lists everything that happened to the account in one month. This Year 12 Mathematics Standard 1 (NSW) guide shows how to find the closing balance, work out a missing line, calculate the minimum payment, and see why paying only the minimum leaves most of the debt to be charged interest again.
A credit card statement shows one month of the account: the opening balance, purchases, cash advances, fees and charges (including interest), payments, and the closing balance, which is what you still owe.
Everything that adds to the debt is added to the opening balance; payments are taken off. If a line is missing, rearrange the rule, e.g. payments \(=\) opening \(+\) purchases \(-\) closing.
The minimum payment is a percentage of the closing balance (e.g. \(3\%\)), or the greater of a dollar amount and that percentage. Pay by the payment due date to avoid a late fee, and pay the full closing balance to avoid interest. Paying only the minimum means the balance falls very slowly.
The closing balance on a statement:
Rearranged to find a missing payments line:
Rearranged to find a missing opening balance or purchases line:
The minimum payment as a percentage of the closing balance:
How to read a credit card statement
- Sort the lines: purchases, cash advances and fees are added; payments are subtracted.
- Find the closing balance (or rearrange the rule to find a missing line), then check it by substituting back.
- Work out the minimum payment from the closing balance, taking the larger amount for “the greater of”.
| Opening balance | \(\$860.00\) |
| Purchases | \(\$415.00\) |
| Fees and charges | \(\$15.00\) |
| Payments / credits | \(\$600.00\) |
| Closing balance | ? |
Add the purchases and fees, subtract the payments, then take \(3\%\).
| \(\text{(i) closing}\) | \(=\) | \(860+415+15-600\) |
| \(\) | \(=\) | \(\$690.00\) |
| \(\text{(ii) min.}\) | \(=\) | \(0.03\times690\) |
| \(\) | \(=\) | \(\$20.70\) |
Closing \(\$690.00\); minimum \(\$20.70\).
Rearrange closing \(=\) opening \(+\) purchases \(-\) payments.
| \(\text{payments}\) | \(=\) | \(\text{opening}+\text{purchases}-\text{closing}\) |
| \(\) | \(=\) | \(1250+340-790\) |
| \(\) | \(=\) | \(\$800.00\) |
Check: \(1250+340-800=790\) \(\checkmark\). The payments total \(\$800.00\).
Work out \(2\%\), then compare it with \(\$25\).
| \(\text{(i) }2\%\) | \(=\) | \(0.02\times980=\$19.60\) |
| \(\text{min.}\) | \(=\) | \(\$25\ (\text{as }25\gt19.60)\) |
| \(\text{(ii) }2\%\) | \(=\) | \(0.02\times2150=\$43\) |
| \(\text{min.}\) | \(=\) | \(\$43\ (\text{as }43\gt25)\) |
(i) \(\$25.00\), (ii) \(\$43.00\).
Add the interest first, then subtract the payment.
| \(\text{interest}\) | \(=\) | \(0.015\times1500=\$22.50\) |
| \(\text{(i) balance}\) | \(=\) | \(1500+22.50-30\) |
| \(\) | \(=\) | \(\$1492.50\) |
| \(\text{(ii) balance}\) | \(=\) | \(1500+22.50-200\) |
| \(\) | \(=\) | \(\$1322.50\) |
Paying the minimum takes only \(\$7.50\) off the debt; paying \(\$200\) takes \(\$177.50\) off, so the debt is cleared much sooner with far less interest.
Common pitfalls
Frequently asked questions
How do you read a credit card statement?
Start with the opening balance, add purchases, cash advances and fees and charges, then subtract payments to get the closing balance. The statement also shows the minimum payment and the date it must be paid by.
How do you calculate the closing balance on a credit card statement?
Closing balance equals opening balance plus purchases plus cash advances plus fees minus payments. For example, 1150 plus 380 plus 50 plus 12 minus 700 gives 892 dollars.
How is the minimum payment on a credit card calculated?
It is usually a percentage of the closing balance, such as 3 percent, or the greater of a fixed dollar amount and that percentage. For a closing balance of 892 dollars, 3 percent is 26.76 dollars.
How do you find a missing value on a credit card statement?
Rearrange the closing balance rule. For example, payments equal opening balance plus purchases minus closing balance, so 1250 plus 340 minus 790 gives payments of 800 dollars.
Is it bad to only pay the minimum on a credit card?
Paying the minimum avoids a late fee, but interest is charged on the rest. On a 1500 dollar balance at 1.5 percent per month, a 30 dollar payment only reduces the debt by 7.50 dollars, so it takes a very long time to repay.