How To Read a Credit Card Statement

By Katana Dumont
November 16, 2020

An important part of making wise financial decisions is paying attention to your payments and evaluating your spending. Ensuring you know how to read your credit card statements and knowing what to pay attention to are two important ways to stay on track of your financial goals. Ideally, you’ll review your credit card statement each month to ensure your budget is on the right track and there are no errors or fraudulent charges that could cost you. You will want to review any changes, check your credit score, and ensure any payments are posting as you expect.

To help you better understand your statement, we’ve provided a summary of each of the basic sections of a credit card statement as well as highlighted the key items you should focus on. While all credit card statements have the same basic information, the data may be presented in a slightly different order depending on your card issuer.

Understanding a Credit Card Statement

By law, your statement must be sent to you at least three weeks prior to your payment due date, but you should be able to find it at any time through your bank’s website. Reading your statement is important — itemized charges will help you notice trends in your spending and you’ll find important information regarding your outstanding balance and other events related to your credit card account. Regularly checking credit card statements will make you a savvy cardholder.

1. Account summary

The account summary provides an outline of where your account stands and your balance total. This will include your payments, credits, purchases, balance transfers, cash advances, fees, interest charges, and amounts past due. It will also show your new balance, available credit (your credit limit minus the total amount you owe), and the last day of the billing period (payments or charges after this day will show up on your next bill.)

What to focus on:

  • Your current balance
  • Amount of credit you have available
  • Any fees or interest you’ve been charged
  • Figures related to your cash credit limit 

2. Payment Information

The payment information section lists the payment you must make to avoid late payment penalties. This section will provide you with your outstanding balance and the minimum payment required to avoid late fees or Annual Percentage Rate (APR) increases. We recommend setting up automatic payment so you don’t miss the due date.

If you do miss a credit card payment, try to submit at least the minimum as soon as you can.  Once your payment is 60 days overdue, you’ll face a penalty interest rate and your delinquent payment will be reported to the three major credit bureaus (Equifax, Experian, and TransUnion), resulting in a hit to your credit score.

What to focus on:

  • Your current balance
  • The minimum payment due
  • The due date

3. Late payment warning

The late payment warning disclosure explains specifically what will happen if the credit card company receives your payment late. Your credit card issuer will provide you with the associated fee and penalty APR you may face if your payment isn’t in by the due date. There’s no need to be alarmed by this warning; this information will be presented in each statement, even if you have a perfect payment history. If you have been late on a previous payment, the payment information section will include a past due amount.

What to focus on:

  • Amount of the late fee and penalty APR
  • Past due amount in the payment information section

4. Minimum payment warning

Included on some statements is a minimum payment warning, which explains how long it would take you to pay off the current balance if you made only the minimum payment and how much interest you would pay. Credit issuers must provide this information to indicate where you stand in paying off your balance. Keep in mind that if you just stick to the minimum payment each month, you could easily end up paying more in interest than you charged to the card in the first place.

What to focus on:

  • How long it will take you to pay off the current balance
  • The interest

5. Payment coupon

Your credit card statement will include a payment coupon that you can include with your credit card payment. Including the coupon helps the credit card issuer process your payment and apply the payment to the correct account. If mailing your payment, detach the coupon and place it in the envelope with your credit card payment. But if available, utilizing automated or electronic payments is the best way to keep your payments consistent. 

What to focus on:

  • Bank’s payment address
  • All the information necessary to pay your bill

6. Transactions

In this section, you’ll find a list of all your transactions, or charges and payments, that you’ve made, in the order of the date they occurred, including: purchases, payments, credits, cash advances, and balance transfers. Some credit card companies group these by type of transaction, others list them by date of transaction or by user, if there are different users on the account. Pay close attention to the transactions section of your billing statement. Make sure all the transactions and amounts are accurate and report fraudulent or unauthorized charges to your creditor immediately.

What to focus on:

  • Unauthorized transactions
  • Trends in your monthly charges
  • Transaction dates and charges

7. Interest charge calculator

Interest is calculated separately for each type of balance you have on the credit card, including purchases, balance transfers, and cash advances. Promotional APRs and their expiration will be listed in this section. This can be useful when checking on the status of any promotional or introductory APR period, if you’re looking into a cash advance, or when you’re interested in executing a balance transfer.

What to focus on:

  • Interest charges
  • Type of transaction
  • APRs that currently apply to your account

8. Year-do-date fees

Your billing statement must include a running total of the interest and fees you’ve paid this year on your account. You can avoid some fees, such as over-the-limit fees, by managing how much you charge and by paying on time to avoid late payment fees. You can also reduce the amount of interest you’re paying by either negotiating a lower interest rate or by paying your balance faster. Keep in mind that some fees are unavoidable, like an annual fee, but other fees, like late fees and cash advance fees, are easy to escape.

What to focus on:

  • The total you have paid this year
  • Which fees you can avoid

 

9. Account changes notification

Any changes to your account, like an annual fee or increased interest rate, will appear on a special section on the front of your billing statement. The statement must also include the effective date of these changes. Your credit issuer is required by law to inform you of all of these changes, so pay special attention to this section.

What to focus on:

  • Fee or interest rate changes
  • Effective date of account changes

10. Rewards

It’ll depend on your credit card, but if you’re enrolled in a rewards program you’ll find an overview of where you stand with rewards at the end of your statement. Some statements are more inclusive than others, but generally you will find the points you’ve earned during the billing cycle and the total rewards amount available. Understanding how your credit card’s rewards program works is highly advantageous when it comes to planning an upcoming vacation or looking to earn free cash!

What to focus on:

  • Total rewards earned
  • Where your points came from
  • Amount of rewards available for redemption

 

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Katana Dumont is a freelance writer and Digital Content Specialist. She writes articles focused on simplifying personal finance topics, with the hopes of educating young people on the importance of financial literacy.

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