You could be paying far more for your credit card than you expect because of the way it's interest is calculated on your monthly statement.

A 'Which?' report from the Consumers' Association criticises credit card companies for their misleading and often confusing calculations of credit card Annual Percentage Rates (APR).

It has outlined examples of how unclear information about transaction dates, statement dates, interest start dates and final payment dates can often leave the consumer out of pocket.

A spokesperson from the Consumers' Association, says: "As it stands, it's virtually impossible for people to understand how their statements are being calculated.

"Credit card statements should be standardised across the board and offer a more simplified way of charging."

Timings

The report says you can often end up paying more because the credit card company doesn't receive your payment in time - and this isn't always the customer's fault.

The 14 or 28 days you have to pay your bill before incurring interest starts from the statement date, not the date you receive it.

Their research found that only 4 out of 18 companies asked actually post on the statement date - and most used 2nd class.

Statements typically took four to six days to arrive but some took 10, 12 or 15 days, so if you're not paying by direct debit, the clearance time of paying by cash or cheque at a bank can leave you only a small window to avoid paying more interest.

Confusion

Much of the confusion over payments stems from the number of different ways your interest can be calculated.

Mr Tyson-Davies: "It's complex."

If you pay your bill each month in full for example, you don't expect to pay interest but some cards will charge you interest from the statement date up until the date they actually receive payment from you.

If you part-pay your bill, interest can still be charged on the full amount you borrowed - so paying �999 of your �1000 would still incur an interest charge on the whole �1000 up until the date you part-pay and interest on the �1 only after that.

The date from when you start paying interest can make a difference to your bill.

Some cards start charging from the date you make your purchase while others charge from the date the transaction reaches your account, which is usually a couple of days later.

Whole picture

With most credit cards, you pay interest on cash withdrawals from the date you make them until the date you pay in full but if you don't get charged for withdrawals, there could be a handling fee.

Interest-free periods are good for consumers who continuously have a balance owing on their credit card because the rate tends to be lower but if you like to pay fully each month, you can end up paying interest.

Melanie Green, who wrote the report, says reading your statement carefully is crucial, although some lenders will provide more essential information than others.

For example, the transaction date; APR; any promotional rate and the date it ends; Bank of England base rate; annual fee; date by which your payment must reach their account; how many days you have to pay, from the statement date.

She says it's also important to look at the whole picture: "Don't choose a card solely on the basis of the way they calculate interest on their statements. Also take into account the interest rate and other charges, such as annual fees."

Complex

Richard Tyson-Davies from the Association of Payment and Clearing Services (APACS) admits improvements are needed.

"We want a level playing field and we want our rates to be as clear as possible for our customers. We are prisoners of a very complex situation."

There is some good news on the horizon, which will help consumers.

From the end of this year, under The Banking Code, companies will have to show the APR (Annual Percentage Rate) on all statements and how much interest you will pay if you only make the 'minimum payment' on your bill.