Managing my money for young adults
Managing my money for young adults

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

13 What is the credit card statement telling me?

The next video explores what you will find on a typical credit card statement. Watch carefully so that you can complete the next activity – the last one in this session.

Download this video clip.Video player: mmmft_1_video_week1_section13_credcard.mp4
Copy this transcript to the clipboard
Print this transcript
Show transcript|Hide transcript
Interactive feature not available in single page view (see it in standard view).

Activity 4  Understanding interest charges on credit card accounts

Timing: Allow about 10 minutes

The credit card statement estimates that if only the minimum amount of £25 is paid off the outstanding balance of £355.74 then the interest to be added will be £7.41.

  • What is this estimated figure as a percentage of the outstanding balance (less the £25 minimum payment)?
  • The monthly rate of interest for balances held on the card is 1.24%. Why is the percentage much lower than the percentage you calculated in the first question?
To use this interactive functionality a free OU account is required. Sign in or register.
Interactive feature not available in single page view (see it in standard view).


  • The percentage is [£7.41/(£355.74 - £25)] x 100

    This is (£7.41/£330.74) X 100 = 2.24%

  • This is higher than the monthly interest rate of 1.24% because it is based on the time period between the purchases made with the card and the payment date on next month’s bill. This will be much longer than a month – in fact it will typically be closer to two months.

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371