Credit Card Statement: How To Read And Understand It

If you have a credit card, you should receive a monthly credit card bill or statement electronically or by mail. This document outlines your purchases, charges and amounts owed for every billing period. Reading and understanding your credit card statement can be vital to pursuing your financial goals.

Let’s dive into what your credit card statement can tell you about your personal finances, including how it can help you avoid falling into debt.

Your credit card statement summarizes your credit card usage throughout the card’s latest billing cycle. Traditionally, the statement is mailed to cardholders once a month, but banks and card issuers now offer paperless billing that delivers the statement via email.

Credit cards, like other types of revolving debt, have individual credit limits and interest rates, and what you owe each month depends on how much you spent that billing cycle. Your credit card statement breaks down all purchases for that period, plus interest and other charges – such as late fees – so you can see why you owe the amount you owe.

Credit card statements will differ in layout between credit card providers, but the information given is generally the same between companies. In the next few sections, we’ll break down the different types of info you can expect to find on your monthly credit card statement.

Personal Account Information

Near the top of your statement, you should see your personal information. This should include your full name, contact information, account number and the dates of your billing cycle. It’s very important that this information is all correct so that your payments can be reported to the credit bureaus.

Account Summary

Your account summary totals up your current balance and reveals your payment due date. You’ll typically see the following listed:

An account summary may also list balance transfers or cash advances made using your card, if applicable.

Payment Information And Credit Card Statement Balance

The payment information section shows your current outstanding balance as well as the minimum payment due. Making at least the minimum payment every month helps you avoid late fees or an increase to your annual percentage rate (APR). Your payment’s due date is also listed again here.

You may also see a late and minimum payment warning in this section. The late payment warning tells you what you’ll owe in late fees if you miss your due date. Your minimum payment warning calculates how long it’ll take to pay off your current balance if you only pay the minimum amount every cycle. This section will also demonstrate how much faster you could pay off your outstanding balance if you paid more than the minimum amount.

You’ll also see your available credit, or how much more you can spend before hitting your credit limit.

Transaction History

Typically the largest section on your statement, your purchase history lists every purchase made with your card for the current billing cycle. Your transactions will usually be listed like this:

• The date the card was used
• What was purchased and the name of the vendor/retailer
• The amount charged to your card

At the bottom, you’ll typically see the total amount spent on purchases for this billing cycle.

Year-To-Date Charges

Your statement will show you the total fees and interest charges you’ve incurred since the beginning of the current year. Most fees can be avoided, but if your credit card issuer charges an annual fee, it’ll show up on the year-to-date part of your statement.

Interest Charge Calculation

The interest charge calculation shows the APR for the different balances you may have on your card. Some credit cards offer options for balance transfers and cash advances, both of which will carry different interest charges than your card’s purchase balance.

For every type of balance on your card, you’ll see the APR applied to it, the balance subject to interest rate and the amount of interest charged to that balance.

Rewards Summary

If your credit card offers cash-back deals, you should see a summary of these rewards near the bottom of your statement. Similar to the account summary, you should see listed:

• Your cash back balance prior to this billing cycle
• The amount of rewards earned during the current billing cycle
• The amount in rewards redeemed during this billing cycle
• Your total available cash-back rewards

You can apply your available rewards toward purchases made with your card or paying down your balance.

Important Changes To Your Account

Your credit card provider must notify you of important changes made to your account at least 45 days before the changes go into effect, and the company can also communicate the changes on your credit card statement. Not all banks or card providers will include a dedicated section on your statement for these changes.

Important changes may include increases in interest rates and fees, as well as any credit limit increases you’ve earned or requested.

It’s generally best to keep your credit card statements for 60 days before getting rid of them. If your statements include certain tax-related expenses, you should hold onto them for 3 – 6 years.

Since credit card statements contain your personal and financial information, it’s wise to keep them in a protected place like a safe or a locked file cabinet. When the time comes to get rid of your statements, make sure to shred them rather than just throwing them away. Identity theft often occurs when people find old credit card statements in dumpsters or outdoor trash cans.

With paperless billing now a popular option, it can be easier to hold onto your statements for longer without them taking up room in your home. Download your e-statements so you can have them in a safe folder or file that you can access anytime. When you decide to get rid of them, simply delete them.

Reading and understanding your credit card statement can help you maintain financial health in several ways:

• You’ll know when your next payment is due. Knowing your payment due date and the minimum amount owed can help you avoid late fees and damages to your credit score.
• You can plan your monthly payments. The minimum payment warning on your credit card statement demonstrates how long it’ll take to pay down your balance if you pay only the minimum amount every month. This could encourage you to make larger payments – if you can afford them – in order to pay down your debt more quickly.
• You can spot fraudulent charges. You can review your purchase history and confirm you made all purchases. If you notice any suspicious or unfamiliar activity, you should report it to your provider immediately.
• You’ll know about changes to your account. If you pay attention to your credit card statements, you won’t be surprised at any changes in fees or interest rates on your card.
• You can keep track of your spending. If you’re conscious about staying within a budget, reviewing your spending habits and where you could cut back can help you stay out of credit card debt.

If you have multiple credit cards with a high balance, you may have options for debt consolidation. This means paying off your debt and replacing it with a single monthly payment and interest rate.

Your credit card statement provides all the information you need to manage your credit card usage. By reading and understanding your statement, and all of the sections within it, you’ll be better prepared to make your payments on time and in the correct amount, as well as track your spending. If your statements begin to show that you’re building up too much credit card debt, you should consider changing up your spending habits or looking into debt consolidation options.

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