If you are someone who frequently uses a credit card to make purchases, you must be familiar with the monthly credit card statements that show up in your mailbox or inbox. While it may be tempting to ignore these statements or give them just a cursory glance, it’s important to take time to read them carefully. Credit card statements can contain valuable information about your spending habits, interest rates, fees, and rewards. Understanding how to read your credit card statement can help you stay on top of your finances, avoid unnecessary charges, and make informed decisions about your credit card usage. In this blog post, we’ll walk you through the key components of a credit card statement and give you tips on how to interpret them. So, let’s dive in!
Account Information
Name and address: self-explanatory but make sure your name is right, including spelling, so it is correctly reported to the credit bureaus.
Account Summary
Opening/Closing Date (Billing Cycle): the period (approximately one month) that the credit card bill pertains to.
Payment Due Date: This is the last day you are able to pay the minimum balance on the credit card in order to avoid a late fee. Highly recommended that you pay off the full balance every month, so you don’t start accruing interest on balances carried forward. Also, it is highly encouraged to pay before the due date so you don’t worry about missing the deadline. Hot Tip: set up “Auto-Pay” feature on all cards to pay the minimum on the due date as a back up to ensure you don’t miss a payment. A great safety net to have to ensure you’re not late, which can be detrimental to your credit score by even missing a single payment.
Previous Balance: If you carried over unpaid bills from the last bill, you will see an amount listed
Payments and Credits: If you made any payments or received credits to your account, it will reflect here. Hot Tip: you can pay your credit card bill multiple times a month if you need to! There is nothing stopping you on doing so!
Fees: This includes late fees, over the limit fees, foreign transaction fees, balance transfer fees, and annual fees. If you don’t know how fees are calculated, check out the fine print section of your credit card statement.
New Balance: The new total of how much you owe to pay off your bill.
Credit Limit: The number shown here is the maximum amount of money the card issuer will allow you to spend on the card.
Available Credit: This amount is the money you have left to use in a billing cycle. You can calculate your available credit by subtracting your current balance from the card’s credit limit.
Account Activity
Merchant: Here is where you can see who the merchant is that you purchase goods and services from. Some vendors may do business under a different name that what you see online or in stores. If you see an unfamiliar name or transaction, call the number on the back of your card to inquire about it.
Date: This is the date your credit card was used. There also may be a date labeled “Posted Date” which is the day the transaction was fully processed and applied to your account.
Category: Some card issuers show you what category the purchase was coded as. Some examples are grocery stores, restaurants, entertainment, travel, merchandise, etc.
Amount: The amount that was applied to your card. For restaurants where you leave a tip, the amount will be updated when the merchant applies the tip you elected when dining.
Account Terms/Fine Print
Annual Percentage Rate (APR): This is the yearly interest rate charged on your credit card balance if not paid by the due date. This percentage can be variable and compounded daily on balances unpaid. There should be a section of the credit card statement which explains how any interests is calculated on your balance that is subject to charges. We highly recommend you pay off your bill every month, so you are no subject to interest.
Contact Information: Credit card issuers and banks will give you phone numbers, addresses, and websites for you to reach out if there are any questions or concerns regarding your account.
Various Rights: There will be different paragraphs explaining your rights as a customer. Various topics will include what information is sent to credit bureaus, what to do if you think you find a mistake on your statement and making payments.
Conclusion
Although reading your credit card statement may seem like a mundane task, it is a crucial step in managing your finances effectively. By taking the time to understand your credit card statement, you can keep track of your spending, avoid unnecessary fees, and make informed decisions about your credit card usage. Remember to pay attention to the due date, minimum payment, interest rates, and fees. If you have any questions or concerns, don’t hesitate to contact your credit card issuer.
By being proactive and informed, you can stay on top of your credit card usage and avoid any financial surprises down the line. If you’re interested in meeting with me to go over your credit card statement, CLICK HERE.
Best,
Brandon