Understanding Credit Card Statements

Front

What is the formula to calculate monthly interest on a credit card balance?

Back

Monthly Interest = (Annual Percentage Rate (APR) / 12) * Balance

Front

If a credit card has a balance of $1000 and an APR of 24%, what is the interest charged for one month?

Back

$20

Front

What happens if you do not pay your credit card bill in full by the due date?

Back

The credit company can charge interest on the remaining balance.

Front

What is the maximum amount you may borrow on a credit card called?

Back

Credit limit

Front

What is a credit card statement?

Back

A document that summarizes your credit card activity, including purchases, payments, and interest charges.

Front

If you have a credit card balance of $1200 and you make a payment of $400, what is your new balance?

Back

$800

Front

What does APR stand for in relation to credit cards?

Back

Annual Percentage Rate, which is the yearly interest rate charged on borrowed money.

Front

What is the difference between a credit limit and creditworthiness?

Back

Credit limit is the maximum amount you can borrow, while creditworthiness is an assessment of your ability to repay debt.

Front

How is the new balance calculated after a payment is made on a credit card?

Back

New Balance = Previous Balance - Payment + Interest (if applicable)

Front

What is the significance of the due date on a credit card statement?

Back

It is the date by which you must pay your bill to avoid interest charges.