Credit card companies send out monthly statements to inform you about all aspects of how much you owe, how much interest you pay each month, and the minimum amount you can pay to remain current on your bill. There is much more information on your monthly credit card statement than this. The more you know about your statement, the better prepared you are to pick out the most relevant information and your efforts to keep your credit (and credit score) on track. Here’s what you need to understand about your credit card statement.
Understanding Basic Information
You need to understand that credit card companies are legally required to provide you with the information on your credit card statement. For legal purposes, your credit card statement must provide certain information. This information includes the following details:
- A summary of account activity. The cycle is from the previous billing date to the current billing date.
- Payment information. That includes your total balance, your minimum payment, and the due date for your payment, which you should note is 5:00 p.m. of that date and not before midnight.
- Various warnings, including late payment warnings, higher interest rates and fees you may incur if your payment is late, and a minimum payment warning explaining how long it will take to pay off your bill if you only make minimum monthly payments.
- Notifications of upcoming interest rate changes or adjustments to your account terms.
- A list of transactions for the billing cycle.
- Fees and interest charges included in the current billing cycle.
- Interest charge calculation details.
- Year-to-date totals for your account.
It’s a lot of information, but once you learn the most relevant information, you can prioritize how you view your credit card statement each month to maximize your understanding and account management more effectively.
The Statement and Minimum Payment
One of the most important things consumers can understand about their credit card statements is the minimum payment impact on their financial health. Making only the minimum payment can drastically increase the interest you will pay for your purchases, exponentially increasing the costs of these items. The information on your credit card statement shows the potential effects of minimum payments on your long-term financial stability by design. Keep this in mind and consider paying as much of your credit card balance as possible each month. Doing this will help you reduce the total amount you pay for the items you purchase.
Transactions and Charges
The transactions and charges section is another area you need to evaluate carefully. If there are fraudulent charges on your credit card, this is where you will notice them first. If you ignore this part of your statement, it may take months for those charges you did not make to register. Additionally, keeping up with the monthly charges lets you know where you’re spending the most money so you can manage your expenses if you’re trying to cut costs and save more money.
Payment Information
The payment information section includes your current balance, last payments, the minimum payment for this billing cycle, and the date your payment is due. Pay special attention to the amount due and your due dates, as late payments can cost you so much more in late fees and increased interest rates than you can handle. Remember that your current balance includes not only the charges you made during the billing cycle but also includes interest, service charges, fees, etc., that your credit card company charges.
Understanding Interest
Interest is often the most complex aspect of your credit card bill. Considering that credit card companies often levy different interest rates for different types of transactions, the problem doesn’t become any easier. For instance, your credit card company will likely charge different interest rates for balance transfers, cash advance transactions, standard credit transactions, etc. Fortunately, the credit card company does the math on the statement. You are always strongly advised to check the math to ensure the information is accurate and that you aren’t paying any excess interest or fees.
Tips for Regular Review of Your Statement
It is essential to ensure the accuracy of your credit card statement each billing cycle. It only takes a few minutes to look over your statement each month. Creating a habit of appraising and double-checking your credit card statement every time it arrives can save you a world of trouble in the long term and help you keep your credit on track. It can also help you avoid accidental fees, like over-the-limit fees.