If you want to stay out of credit card debt, avoid high interest payments and fees, and protect yourself from credit card fraud, you need to fully understand one thing–your credit card statement. The definitions and explanations below should help you get a better handle on the terms and information found there:

Annual Percentage Rate (APR)

When you apply for a credit card, one thing you probably look at is the interest rate. This is generally expressed as an APR. If the APR were 10%, it doesn’t mean you would be charged 10% on each month’s balance before payment. Instead it means that if you left your purchase balance alone for a year, the total interest accumulated would equal 10% of that balance–or a $100 purchase would cost you $110 over the course of a year. Although just about all credit cards compound interest every month. So in actual fact if you didn’t pay your $100 on a 10% APR, with interest compounded monthly, you will be paying interest on your interest. Note that you may have different APRs for retail purchases, balance transfers, and cash advances.

Interest Charged

The actual interest you are charged each month is based on your balance, your daily percentage rate (your APR divided by 365 days in a year), and how many days you have been accumulating interest after any interest-free days. The interest charged is calculated by multiplying your balance or transaction amount (not all of your balance may be subjected to interest, such as with 0% interest balance transfers) by your daily percentage rate and then by the number of days you accrued interest.

Interest Free Days

Some credit cards (like the ANZ Low Rate credit card) may offer interest free days. This means you wouldn’t begin accruing interest on your transactions during that period (up to 55 days for the ANZ Low Rate MasterCard). Be careful though. Read your credit card terms, and you may discover that you only receive interest free days if you paid off your balance in full the previous month or billing cycle.

Rewards Points

If you use a rewards card (like the Commonwealth Bank Awards card), your statement should include your rewards point balance and a note of how many points were accumulated during the previous billing cycle. Depending on your rewards card, those points may be redeemed for products, cash back, frequent flyer points, or other awards.

Minimum Payment Due

This is simply the amount you must pay by the due date on your statement to avoid a late fee. You won’t be penalised if you pay more, and doing so is recommended. In fact, paying off your bill in full may be a requirement to receive some perks (such as the interest free days example mentioned above).

Due Date

This is self-explanatory–it’s the date your payment must be received by the credit card company to avoid late fees. Always mail your cheque as early as possible (if not using an EFT payment option) to make sure its processing isn’t delayed.

Transaction Details

Your credit card statement should list details about every transaction made in the previous billing cycle. Review this carefully every month. It’s the best way to identify unauthorised charges you may otherwise not have noticed, cluing you in to possible credit card fraud or identity theft.

Fees

Any fee charged to your account should be detailed on your credit card statement. If you were charged a late fee, but your records show payment was made on time, contact the bank to get a reason for the discrepancy. If you were charged an over-limit (or overdraft) fee, but your records don’t show you were nearing your limit, verify that your last payment was received and applied and that there are no unauthorised charges on the account.

Every credit card statement will be slightly different depending on your issuing bank and card features. If you have questions about fees, interest rates, reward point balances, or anything else appearing on your statement, it’s best to contact the credit card company right away to clear things up. This way, if there was a problem on your end, you’ll know how to avoid the issue in the future, and if they made a mistake they have a chance to correct it. The more you know about your credit card statement and terms, the better-prepared you’ll be to manage your credit card debt.