How to Read Your Credit Card BillBy Caitlin in Credit
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 card holder 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 card holder.
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.
Payment information appears first thing on your credit card statement, it’s usually separated into 3 different boxes as there is 3 important numbers that make up your payment information.
- 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.
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. Here will also be any information about limits and available credit.
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 their 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.
The interest charges section is separated based on the kinds of transactions you’ve used your card for. So there will be a section for purchases, balance transfers and cash advances. Each of these transactions probably has their own interest rate, that’s why they’ll be written separately.
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.
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.
On the back of every 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.
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.
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.