Credit card statements: How to read and understand the monthly data

When you open a credit card, you’ll receive a statement from your credit card company every month. Your credit card statement details all the purchases that have been made during the statement period – as well as another interest charges, fees, and amounts owed. Let’s dive into how to read a credit card statement.

What is a credit card statement?

Your credit card statement summarizes your use of your credit card over the course of each monthly billing cycle. In addition to listing all the charges you made during the statement period, it also will show any outstanding amount owed, interest you’ve been charged, fees you’ve incurred, and payments you’ve made. Your credit card statement will also tell you when your next payment is due. Traditionally, your credit card company would mail you a paper copy of your statement, but these days most banks and issuers deliver it electronically.

It's important to review your credit card statement to track your spending, spot any mistaken charges, know how much you owe, and know the deadline for your next payment. Your statement will tell you the total amount that you owe and the minimum payment you’ll need to make.

Credit cards, like other types of revolving debt, have individual credit limits and interest rates. What you owe each month depends on how much you spent during the billing cycle.

How to read a credit card statement

The layout of your credit card statement can vary depending on the bank or credit card issuer, but the information given is generally the same. We’ll break down the different types of info you can expect to find on your monthly credit card statement.

Personal account information

Your credit card statement will typically kick off with your personal information. This includes 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 credit bureaus.

Account summary

Your account summary totals up your current balance and tells you when your payment is due. You’ll typically see the following listed:

• Previous balance. If you didn’t pay off your card in full during the last billing cycle, you’ll see the amount you still owe listed.
• Purchases. This is the total amount charged to your card during the statement period.
• Payments. Any payments you made to your credit card will also be listed.
• Interest. If you don’t pay off your card in full, you’ll be charged interest based on the amount you still owe.
• Fees. Any late fees or annual fees you’ve been charged.
• Other credits. You’ll also see any credits that have been applied to your balance.
• Balance transfers. If you’ve made any balance transfers or cash advances, you’ll see those listed.
• New balance. This is the current amount you owe as of the closing date on this statement period.

Payment information and credit card statement balance

The payment information section shows your current outstanding balance, the minimum payment due, and the payment due date. You’ll need to make at least the minimum payment to avoid getting charged late fees and hurting your credit score. Delinquent payments can also cause your credit card company to increase your annual percentage rate (APR), which is the amount you’re charged to borrow money expressed as a percentage. If you want to avoid paying interest on your purchases, you’ll need to pay off your statement balance each billing cycle. 

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 would take to pay off your current balance if you only pay the minimum amount every cycle. This accounts for the interest you’d be charged if you only make the minimum payment and don’t make any further charges to the card. If you keep making purchases and only make the minimum payment, it will take even longer to pay off the card and you’ll be charged more interest. The idea of this section is to show you how much faster you’d pay off the balance if you pay more than the minimum amount.

You’ll also see your available credit, which is the amount you can spend before hitting your credit limit.

Transaction history

The largest section on your statement is typically your transaction history, which lists every purchase or charge you’ve made with your card for the current billing cycle. Your transactions will usually be listed like this:

• The date of the transaction.
• The vendor or retailer and their location.
• The amount charged to your card.

At the bottom, you’ll typically see the total amount charged to the card this billing cycle.

Year-to-date charges

This section shows you the total amount of interest and fees you’ve incurred since the beginning of the current year. Most penalty fees can be avoided. Some credit cards come with an annual fee that you get charged each year. If your card has an annual fee, you’ll see that listed here.

Interest charge calculation

The interest charge calculation shows the APR for the different balances you may have on your card. Some credit cards offer balance transfers and cash advances, both of which 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

Credit cards often offer rewards programs to incentivize you to use the cards. To reward you for spending, you might be awarded points that you can redeem for cash-back deals or airline miles. Cash-back deals can help you pay down your balance. Similar to the account summary, you should see:

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

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 often the company can also communicate the changes on your credit card statement. However, not all banks or card providers will include a dedicated section on your statement for these changes. Common examples of changes to your account include increases to your APR, new fees, or a credit line increase.

How long should you keep credit card statements?

It’s generally best to keep your credit card statements for 60 days. If your statements include certain tax-related expenses, you should hold onto them for up to seven years, in case you get audited. You can learn more about how audits work and what documents you should hold onto from the IRS.

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 discard your paper statements, always shred them. Identity theft often occurs when people find old credit card statements in the trash.

With paperless billing, it’s a good idea to download and save your e-statements. Store them in a safe folder or file.

Why it’s important to understand your credit card statement

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

• You can track your spending. If you’re conscious about staying on budget, review your spending habits and identify areas to cut back to stay out of credit card debt.
• 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 damage to your credit score.
• You can plan your monthly payments. The minimum payment warning on your credit card statement demonstrates how long it will 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 – 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 understand changes to your account. If you review your credit card statements, you won’t be surprised about any changes in fees or interest rates on your card.

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.

Review your credit report

It’s important to monitor your credit report to make sure there are no inaccuracies negatively affecting your credit score. You can get a free annual copy of your credit report from the major credit reporting agencies by visiting AnnualCreditReport.com or by calling 877-322-8228.

If you spot an error, first dispute it with the credit reporting company. Here is where you can submit a dispute for each respective company:

• Equifax^®
• Experian^®
• TransUnion^®

Then, you’ll also want to dispute the error with the company that provided the information to the credit reporting company, whether it’s your bank, your credit card company or another lender.

Final thoughts on reviewing your credit card statement

Your credit card statement provides all the information you need to manage your account. By reading and understanding your statement, you will be better prepared to make your payments on time and track your spending. If your statements begin to show that you’re building up too much credit card debt, consider changing your spending habits or explore debt consolidation options.

Review your options for a debt consolidation loan, and complete an application today with Rocket Loans℠.