Do you ever bother to read your credit card statement, or do you just take the payment coupon off the bottom and pay the amount without looking at anything else? If so, you may be missing several important factors such as penalties, fee assessments, and changes to your annual percentage rate (APR). You may also be missing questionable charges that are being incorrectly assessed to your credit card account, which could indicate a criminal has your information and is testing to see whether you notice the mistakes.
Let's look at the basic components of a credit card statement. Each company differs slightly in the format and some offer extra information such as a free credit score or summaries of rewards programs, but they all must carry the same essential information.
- Account Summary – This sums up all the cash flows for the time period (generally one month). The account summary begins with the starting balance, followed by the reductions to what you owe — payments made during the month and other credits that decrease your bill. Next come the additions to what you owe — purchase amounts, balance transfers from other accounts, cash advances, past due charges, fees, and interest charges. They are all added up to produce your ending balance/new starting balance for the next period.
This section also lists your credit limit and how much you have remaining, the end date for the monthly statement (which can vary by a few days) and the number of days in this billing cycle. Phone numbers for customer service and lost/stolen card issues are listed below this section.
Is the total more or less than you expected? Start by checking the closing date and days in the cycle to make sure a questionable charge is falling in the right time frame. Then look over the categories to find the incorrect number. Follow that up with a look in the Transactions section below.
- Payment Information – This section restates your new balance, the minimum payment amount, and the due date of your payment. Late payment and minimum payment warnings are included, along with a section showing how long it will take you to pay off your existing charges if you pay only the minimum monthly amount. Review that at least once so that you can see why it's important to pay off as much of your bill as you can each month. A number for credit counseling services is also included.
Payment and billing addresses are confirmed here, as well as any links to online bill management.
- Important Information/Changes – If changes are made to your interest rate and/or account terms, they will be summarized in this section. The notice could be a result of payment issues such as triggering higher annual percentage rates (APRs) through poor payment history or a simple change in your credit card issuer's policy. The card issuer must include change notifications 45 days before the change takes effect, so read this section very carefully. You may need to act to dispute a penalty-based change, or may even decide that the changes are worth considering a switch to a different credit card issuer entirely.
- Transactions – This is a list of all the transactions made during the month, including purchases, payments, cash advances, and interest charges. The transaction list will include both a transaction date and posting date (since transactions are not always instantaneous), a reference number that is unique to each transaction, a description of the transaction, and a dollar amount. They may be lumped together or separated by category (purchases, fees, cash advances, etc.).
Look over all the transactions to make sure they are correct, and match purchases against receipts.
- Interest Charge Calculation – This is a summary of all interest charges and how they are calculated by category. Not all transactions are charged at the same interest rate — for example, cash advances are usually charged at a higher APR than regular purchases, and balance transfers or special purchase programs may be low interest or even interest-free. Review these APR rates to make sure that they are being applied correctly.
Typically, the back of the statement will be loaded with information about terms and conditions, how to handle disputes, and other useful tidbits about your account. You should read this thoroughly at least once.
Take a few minutes to review your credit card statement to make sure that there are no surprises in the terms or mistakes in the charges. A periodic review could save you a lot of money. And that’s why we’re here!
If you want more credit, check out MoneyTips’ list of credit card offers.