How to Read Your Credit Card Bill

How to Read Your Credit Card Bill

Written by Caitlin Wood
Last Updated October 20, 2020

Whether you have a high limit or a low one, several credit cards or just one, every single person with a credit card receives a statement in the mail or online every month. Most credit card statements follow the same layout and tell the cardholder the same information. But the one thing that all statements definitely have in common is that they are confusing to read and difficult to understand, especially if you’re a first-time cardholder.

Below we’ve outlined all the information that a credit card statement tells you and paid particular attention to the most important parts that will help you be a responsible credit card user.

Account Summary

Account summary takes up the largest part of your credit card statement; it’s where you’ll find all the information about your current balance. There will be a list of all the charges you made on your card during the statement period as well as payments you made to your card, cash advances you took and any fees or interest charges. You’ll also be able to see your previous balance. You’ll see the balance as zero if you paid your last statement in full, however, if you’ve paid partially or missed the payment completely, the previous balance will reflect that and be added to your new balance accordingly. This information is usually seen at the beginning of your statement. 

Statement Cycle

Your statement period will be indicated at the top of your statement, right above the account summary. Understanding when your statement cycle begins and ends is important as it allows you to understand your interest-free period. For example, if you have an interest-free period of 55 days for the statement period of May 17 to June 16,  then your interest-free period would end July 11.  

Late Payment Information

Here you will find information about the consequences of not paying at least your minimum payment on time. Each credit card company has its own set of rules but usually, you can expect a possible late charge and a rise in the interest rate you pay.

Minimum Payment Information

This is where you’ll find out how long it’ll take you to pay off your current balance if you only continue to pay the minimum payment, as well as how much you’ll actually end up paying because of the interest added each month.

Your credit card company will probably also include an estimate on how much money you’ll have to put towards your card each month if you want to pay it off in 3 years, they usually also include how much you’ll save on interest if you do this. If you’re having trouble paying off your credit card look at this section as it’ll probably motivate you to start working harder towards paying it off sooner.

Interest Charges

Based on the kinds of transactions you’ve used your card for, the amount of interest charged will be different. For example, the interest charged for purchases, balance transfers and cash advances are different and are noted in your statement. To see the charges refer to your account summary.  

Contact Information

Pretty straight forward, here you’ll find all the contact information for your credit card company that you’ll need to make payments or ask questions. This information can usually be found at the bottom of your statement. 

Reward Information

If you have a credit card that has a rewards system then your credit card company will probably include a small summary of your reward balance and how many reward points you earned for the current statement period.

Important Information

On the back of every credit card statement, you’ll find all the fine print and details associated with your credit card. This means all the policies related to errors on your statement, loss or theft of your card, privacy and currency conversion.

Payment Information

Your payment information appears on the bottom of your credit card statement. It’s usually separated into 3 different boxes as such:

  • New Balance: Is the balance of your card as of the final day of the payment or statement period. This is the total amount you owe your credit card company, including any additional fees and interest charges.
  • Minimum Payment Due: Is the minimum amount you must pay for the statement period. Every credit card company calculates their minimum payment differently and it also depends on the balance of your card. Also keep in mind that while the minimum payment will be a small amount if you don’t pay off your card in full you will be charges interest. This means you’ll owe even more money next month even if you don’t actually use your card.
  • Payment Due Date: Is the date that, at least, the minimum payment must be paid by.

Where Should You Focus?

There is a lot of information provided to you on every statement you receive but here are the most important parts that directly affect how you use your card on a daily basis.

  • Payment information: The best way for you to use your credit card is to look at the payment information section and pay the “new balance” by “payment due date.” If you do this you will avoid paying any interest and you’ll be saving money.
  • Account Summary: Use this section to closely monitor the purchases and transactions that appear on your statement every month. If you pay attention you’ll be able to spot any discrepancies and then be able to fix them before it’s too late.
  • Minimum Payment Warning: This section lays out in numbers the most important information you’ll need when deciding how much you’ll put towards paying off your credit card balance this month. Take a look at how long it’ll take you to pay off your card completely if you only pay the minimum payment, this should provide the motivation you need to pay off your card sooner or to use it less.

Bottom Line

Now that you have all the information you need about your monthly credit card statement you should be able to use your card responsibly and efficiently. Knowing where to find any extra information about your credit card company’s policies is one of the most important things you’ll need when using your credit card.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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