Using a credit card without knowing how to read your credit card statement is a bit like going to the doctor and not receiving any documentation about your treatment. You might have some idea of what is going on, but without something to reference later, the details can quickly become fuzzy.
Indeed, reading your credit card statement is a crucial part of keeping your credit in good standing. If you don’t know what is happening with your credit card, you won’t be able to address issues with it. At the same time, you might rack up more penalties, fees and interest than you otherwise would.
Fortunately, all credit card issuers send statements at the end of each billing cycle. How the information is presented may vary depending on the credit card, but the basics should be more or less the same. We’ll break down what each section means to help you understand exactly what you are looking at.
Account summary is an overview of all of your activity for that credit card. You will see your previous balance, payments and credits, interest charged, and more. We’ll cover those in finer detail below. Your account summary won’t give you an itemized view of your transactions. Instead, it gives you a high-level view of everything that happened with your card for that billing cycle.
What you see here doesn’t include the entire history of your usage; typically it is only for a one-month period. In other words, it won’t include anything from before the corresponding billing cycle, or anything after it.
Now, let’s take a closer look at what each item means.
Payments and Credits
Payments and credits are all of the transactions that reduced your balance for that billing cycle. Payments are simply the total amount you paid for that billing period, whether online or by other means. Credits are any refunds or reimbursements you may have received.
Purchases shows the total amount of charges to your credit card for the current billing cycle.
Cash Advances and Balance Transfers
If you requested any cash advances or balance transfers, they will be shown here. A cash advance allows you to borrow against a special cash access line that may come with your card. Keep in mind that the APR for cash advances is often higher than it is for purchases. A balance transfer allows you to move debt from one account to another.
Fees and Interest
This is all of the fees and interest incurred. Remember that this is only for the current billing cycle.
Available credit is the total amount of credit available for purchases for the billing cycle you are viewing. This is simply calculated as your total credit limit minus your current (new) balance.
Past Due Amount
If you have any amount that is past due, the total will appear here.
Account activity is where you see an itemized list of every transaction for the current billing period. This includes every type of transaction — not only purchases but also payments, credits, interest charged, etc.
This section is where you should spend the majority of your time on each statement since it breaks down in fine detail everything that happened since the previous statement. At a minimum, you should see the transaction date, a description (such as the retailer’s name), and the amount of the transaction.
This section will give you several insights into your credit usage. For instance, it will help you understand where you are spending the most, and if there are any spending habits you need to rein in. Plus, if there are any transactions you don’t recognize, you can find them here and report them if you believe there has been unauthorized or fraudulent use of your credit card.
This section shows all of the interest charges to your card for the current billing cycle. However, it often shows more than just a dollar amount. Firstly, for purchases, it will show your annual percentage rate (APR) and the amount of the balance subject to that APR. Then, it will show the total interest charges.
If your card has cash advances or balance transfers available, it will show the same information for those features. Both balance transfers and cash advances have their own APR which is separate from your purchase APR.
Payment information shows important details about the payments you are expected to make on this credit card. This includes the payment due date and the minimum payment due. In other words, this is the smallest amount you can pay by the next due date without risking extra penalties and fees.
Note that if you only pay the minimum balance, you may still be charged interest. If you don’t make your minimum payment by 30 days after the due date, it will be reported to the credit reporting agencies, and your credit score may drop as a result. You may also have to pay a higher penalty APR on purchases.
If your credit card has rewards, such as cash back or points, you’ll see details about rewards earned for the current cycle here. It will show how many points you earned and may break that down based on different rates for different categories. It will also show your previous points or cash balance and your new total for this billing period.
Account messages is a place for any important messages your card issuer has for you. This could be any kind of important notice, such as credit limit increases, auto-pay notices or any policy adjustments.
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