credit cards

Guide to reading your monthly statement

The company will use one of several formulas to calculate your finance charges. The average daily balance is the most common method. An average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle.

You may have several different finance rates on one card -- one for balance transfers, one for cash advances, etc.

Grace period: How long do you have to pay your bill in full before you are charged interest? If you carry a balance, you usually don't have a grace period, and interest accrues immediately on new purchases. Cash advances and balance transfers may also lack grace periods. Check your credit card agreement for details.

Minimum payment: This is the lowest amount you can pay on your bill. It's usually 2 percent to 2.5 percent of the balance, though some could be as high as 3 percent to 4 percent, says Halsey.

Due/Pay-by date: This is the date that your payment has to be recorded in the credit card company's computer. Remember, it's not the date your bill has to be postmarked, or even the date it arrives at the company's office. The typical bill cycle is 29 to 31 days, and the payment is usually due 20 to 30 days from when the bill was printed, says Halsey.

Find out the requirements of your credit cards so that you know the rules of engagement. To play it safe, mail payments 10 days to two weeks before they are due. Since it already took the company a week to get the bill to you, it means that when the bill hits your mailbox, you have to pay it pronto.

Another option is to pay the bill online. You can make the payment immediately and avoid the postal system. Check with your bank to find out how long it takes for an electronic payment to be made and figure that into your payment schedule.

Credit limit: What's the maximum the card allows you to borrow? For cash advances, the credit limit is a fraction of your overall borrowing cap for the account.

Credit card limits can change without notice, so verify the limit each month and before you make a large purchase.

Late fee: Remember when you were late to class and got slapped with detention? The average late fee charged on fixed-rate cards was $24 and $30 for variable-rate cards, according to the April 2009 Bankrate survey.

Over-the-limit fee: If you charge beyond your limit, or if late fees take you over the limit, you get hit with this charge each month until you bring your balance down under the credit limit. In April 2009, Bankrate found the average overlimit fee hit $21 for fixed-rate cards and $29 for variable-rate cards.

Name, address, account number: Self-explanatory, yes. But check them over to make sure all the information is right. Addresses and ZIP codes change, and it's easy to transpose account numbers.

Miscellaneous fees: Sometimes there are fees on the bill for things consumers don't recognize, like credit insurance, says Halsey.

"There have been some creditors who have had these on statements, and clients are not aware they are being charged for that," he says.

Bottom line

If you see an item you don't recognize, whether it's a charge or a fee, call the company and ask for an explanation.

 

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Product Rate Change Last week
Balance Transfer Cards 15.73%  0.01 15.72%
Cash Back Cards 16.43% --0.00 16.43%
Low Interest Cards 10.98%  0.02 10.96%
 
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