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Understanding Your Credit Card Statement

Understanding Your Credit Card Statement

Reading Time: 3 minutes

Many people have the bad habit of not reading their credit card statements. For those who do read, how many really understand what it all means? It is because of this that many people found themselves in credit card debts that have already escalated beyond their control. Don’t be one of these people. Understanding your credit card statement is crucial to your journey towards financial freedom. Use credit cards to your advantage. Learn how credit cards work.

To truly understand how a credit card can be good for you, you need to first be able to read and decipher your credit card statement. The small pieces of information in your credit card bill are all equally important. They can aid you with proper use of your credit card.

If learning about all those terms in your credit card statement all at once is too much for you to handle, at least start with the four most important ones:

1. Statement Date

This is the date that your billing statement is prepared. The date is important simply because it is the cut-off date. All transactions made after the previous month’s statement date to the date indicated are included in the statement.

TIP:  If you think you have already reached the limit of your monthly expense budget, wait until after the statement date to make your purchase. In this way, you will have more than a month of grace period before you need to pay for that particular purchase. For example; if your statement is generated every 5th of the month, items that you bought before the 5th will be billed this month. Purchases after the statement date are for next month.

2. Payment Due Date

The payment due date is the last day for you to make your monthly payments. As long as you have a balance in your credit card, you are obliged to pay every month on or before this date.  Although some credit card companies accept payments on the next banking day after a weekend or a holiday; some no longer do so because of the presence of automated online payments or phone banking.

Take note however that the payment due date varies. Rather than a specific date of each month, it is normally set at 21 days after the statement date.

TIP: Make sure to pay on time so as to avoid penalties and late charges. You can opt to pay early but make sure you do it after the statement date otherwise, that payment would be counted on the previous month’s billing cycle. Also, always take note of the due date because it varies every month.

3. Total Amount Due

This pertains to the total amount that you have used in your credit card that you are liable to pay the card issuer. It is your outstanding balance.

TIP:  Although you are not required to pay the full amount on the payment due date; it is in your best interest that you do so. Any outstanding balance will begin to incur high interest charges.

4. Minimum Amount Due

The minimum amount due is the lowest amount that you are required to pay on or before the payment due date. It is typically a small percentage of your outstanding balance. This is directly proportional to your total amount due. The higher your outstanding balance, the higher your minimum amount due and vice versa.

TIP: Never miss paying your minimum amount due on or before the payment due date. You will not only be subjected to late charges, it will also affect your credit rating. Missed payments will affect your standing with credit institutions and might ultimately affect your capability in acquiring loans in the future. In addition, even if you pay the minimum amount, if you continue to make purchases each month, your balance will continue to grow. This is the fastest way to put yourself in heavy debt. Thus, a word of warning; if you don’t want the power of compound interest working against you, then, refrain from paying just the minimum amount due each month.


First of three parts, click here for Part 2.

First Published in Pinoy Smart Living on 21.05.2019

Feature Image by lcb from Pixabay 

Posted by A.L. Jonas in Financial, 0 comments
Setting Financial Goals for a Better Tomorrow

Setting Financial Goals for a Better Tomorrow

Reading Time: 3 minutes

You have been working hard all your life yet you feel like your financial situation remains the same. You still struggle to make ends meet. What is it that you are missing? What can you do to change your financial life for the better? The answer is to define your goals. Setting financial goals is your key for a better tomorrow.

If you want to have a fresh start in your financial life, the first step is to set financial targets. Having a financial goal will help you make better financial decisions. It will also influence your day-to-day behaviour. Think of it as going on a trip. You need to know where you want to go first before you can even plan out the details of your trip.  Thus, setting financial goals is important for a better tomorrow.

So, what’s your financial goal for this year? If you still don’t have one, it is for your best interest that you start having one now. No matter what age or stage you are in your life right now, even if you are already financially stable, you still need to set your financial goals.

Here are the steps on how to set your financial goals:

1. Determine what you want

In setting your financial goal, the first thing that you have to do is ask yourself. What is it that you want? Do you want to get out of debt? Do you want to have that dream house? Do you want to buy a new car? Do you want to go on that dream vacation? List down all the things that you want to have and accomplish.

2. Classify your goals into Short Term, Medium Term and Long Term

It is impossible to achieve all your goals at the same time. Thus, it is important that you arrange them according to what’s important to you. Learn to prioritise. What is it that you that you want to accomplish first?

For example, you are in your 30s. You want to retire wealthy.  You have a child who will start schooling in four years time. You also have a credit card debt that is ballooning. How should you set your financial goals?

Classify your goals into:

  • Short Term – those that needs to be done in the near future or at least within the year. In the scenario above, your short term goal should be to settle your credit card debt first. 
  • Medium Term – refers to a period of time that is not in immediate yet not too far in the future either. It normally pertains to those goals that you want to accomplish in 2 to 4 years time. The child’s tuition fee in the previous example is a medium term goal.
  • Long-term – pertains to goals in the future usually 5 years onwards. If you are in your 30s, retirement goals will obviously fall into long term goals.

3. Estimate the amount that you need

Since we are talking about financial goals, numbers are very important. You need to know the amount that you need in order to accomplish your goal. For example, your goal is to travel. Estimate the amount that you need to cover your travel expenses. Then, figure out how much you can separate each month for your travel goal. Knowing how much you need can give you an idea on how long it will take you to achieve your goals. Remember, goals must be SMART meaning specific, measurable, achievable, relevant and timely.

4. Budget

Budgeting is a must when it comes to financial goals. Budgeting allows you to have a spending plan for your income. Without a spending plan, there is a tendency to splurge on unnecessary expenses. It will also help you stay on track towards the achievement of your goals.

A good way to budget is through the money jar budgeting system. It is a system wherein you will be able to purchase what your needs and wants yet at the same time limit your spending and grow your wealth in the process.

5. Monitor your progress

Monitoring your progress is very important because it keeps you motivated. It will also allow you to adjust if not your goals but the process on how to achieve your goals.

6. Celebrate small wins

Celebrating small wins will help boosts your confidence level. It will make you feel that you are able to accomplish something and that you are now one step closer towards the achievement of your bigger goal. It will motivate you to keep on going forward. 

What are you waiting for? Define your financial goals now. Setting financial goals is your passport for a better tomorrow.


Image Credit: Gerd Altmann from Pixabay Images

Posted by A.L. Jonas in Financial, 0 comments
How To Recover From Your Holiday Spending

How To Recover From Your Holiday Spending

Reading Time: 2 minutes

As you pack your Christmas decorations back in their cabinet, the money that you’ve blown away during the holidays is now finally sinking in. The mere thought of looking into your credit card account balance may even petrify you. If it’s any consolation, you are not alone in your predicament.The holiday spending hangover is ranked as the number one problem by most people at the start of a New Year according to a study made by LearnVest, an online seller of personal finance software. To put your finances in place, you need to figure out ways on how to recover from your holiday spending.


Try out these tips to get your finances back in shape after the holidays.

1. Put your plastic on hiatus.

The first thing to do is to put a stop on your credit card spending. Your bills as well as the interests will keep on piling up if you will continue using your credit card. A hiatus means to pause – pause just until you pay it in full. Use cash for your purchases instead.

2. Assess your situation.

One thing is for sure, you cannot leave your bills unopened. You will have to face them sooner or later (although later is a bad idea because once your bills become overdue you will find yourself facing unwanted late charges). Instead, gather all statements and receipts related to your holiday purchases. Sum them all up. Then arrange them from the highest to the lowest interest rates. Prioritise and settle all those that charge higher interests rates first. Take note of all payment due dates.

3. Set up a payment plan.

Once you have a figure in mind on how much you are supposed to pay off, the next thing to do is to set up a payment plan. The best option is to pay the amount in full. Although it is the best solution, it is not always viable. So instead, come up with a goal or a target date on when you want to fully pay your holiday spending. Once you have a definite goal, you need to have a smaller goal each month. Pay the maximum amount that you can on a monthly basis and calculate how long will it take you to fully pay the bills.

4. Trim your budget.

To speed up your progress, you need to limit your spending at least until all your holiday overspending has been paid off. There are various ways to reduce your monthly expenses.

Aside from trimming your expenses, this is also the best time to start using a monthly budget (if you haven’t started yet).

5. Sell items that you don’t need anymore.

The start of the year is also a good time to start cleaning your closet or your house for that matter. Get rid of items that you no longer need and sell them. The proceeds can be use to pay your holiday bills. By doing so, you not only earn extra cash but you also get to declutter your home and remove stress. 

Finding out how to recovering from your holiday spending should be your first step in having a fresh start in your financial life.


First published in Pinoy Smart Living 01.01.2019
Image Credit: Gundula Vogel from Pixabay Images

Posted by A.L. Jonas in Financial, 0 comments