The case of a credit card overcharging

If you have a credit card in the Philippines, you'd better check this and make sure you are not being overcharged by the bank.

The image below is a cutout taken from my recent Billing Statement. I laid out here how the discrepancy will occur, and eventually will overcharge you via Finance Charge.

Credit Card Billing Statement cutout

Please be familiar with the term and data:

• MONTHLY INTEREST RATE - it is indicated on top of the billing statement. In my case it is 3%
• FINANCE CHARGE - indicated here is Php 368.25
• PURCHASE ADVANCE - these are the total amount of purchases including the 0% interest for the current billing period.
• PREVIOUS BALANCE - the amount indicated in the previous billing statement. This does not include the payment done for the said previous billing statement.
• PAYMENT RECEIVED (or PAYMENT CREDIT)- this is the payment made for the previous Billing Statement
• LATE CHARGE - This amount is charged to the credit card owner if he/she fails to pay the minimum amount on/before the due date. Charges range from Php 500 up is normally applied to late payment of Minimum Due.
• OUTSTANDING BALANCE - the amount that has to be paid by the credit card owner on/before the due date. Failure of payment will result in LATE CHARGE  in the next Billing Statement.

Now, let us look deeper into the Billing Statement:

• The Outstanding Balance is the sum of PURCHASE ADVANCE plus FINANCE CHARGE plus LATE CHARGE plus PREVIOUS BALANCE minus PAYMENT RECEIVED. So based on the Billing Statement, the values are 5,990.71 + 368.25 + 0 + 11,105.85 - 3,500 = 13,964.81.
• The Outstanding Balance value seems to be correct at Php  13,964.81,  right?   Unfortunately it is ........ WRONG!!!!
• The formula indicated in the first bullet is correct except when somebody forgot to ask where the FINANCE CHARGE came from (or how it was calculated).
• As indicated in the Billing Statement, the percentage is only 3% (MONTHLY INTEREST RATE) and it only applies to the resulting amount taken from PREVIOUS BALANCE minus PAYMENT RECEIVED.
• PREVIOUS BALANCE minus PAYMENT RECEIVED  is equal to 11,105.85 - 3,500 =  7,605.85
• The 3% of Php 7,605.85 is only Php 228.18.
• Comparing the FINANCE CHARGE between calculated value (i.e. Php 228.18) and the listed value in the Billing Statement (i.e. Php 368.25) is the method how you are going to determine if the bank is overcharging you.

Always check this number and try to calculate using a calculator and/or excel. If you found a discrepancy, then always make it appoint to claim that even in a small amount. I you don't want that small amount, you can just donate it for the benefits of the needy.

DO NOT DONATE IT TO THE BANK, THEY ALREADY HAVE LOTS OF MONEY.

People who are so busy with life and has a lot of money to spend, seldom they noticed that small amount is being charged to them.