Credit cards offer numerous benefits for consumers ranging from consumer protections to convenience and rewards. They can also help improve your credit score and build a long history of positive credit, if used responsibly.
However, the bill always comes due when we use credit for purchases. In fact, credit card issuers are legally obligated to send you a credit card statement at least 21 days before your minimum payment is due. These statements can be sent through regular mail or online, but they list a few pages of important information that you should be able to navigate.
Breaking down your credit card statement
Here’s what you’ll see on your credit card statement and how to approach each section:
This section of your credit card statement is meant to serve as an overview of your purchases and payments and how those figures relate to your current credit card balance. Here, you’ll find a summary of your previous credits, payments, balance, the total amount of purchases made this billing period and your new credit card balance. You can also find details on your current credit limit, your available credit and how much you can access in a cash advance.
This section of your credit card statement lists your current balance as well as the minimum payment due and the minimum payment due date. You may also find information on any minimum payments that are past due on your account.
Your credit card statement will also include a payment coupon, although you may not need it if you pay your credit card bill online. The payment coupon section can be used to mail in a check or money order if you choose to pay your credit card bill with those methods. It includes your name and address, your account number, your current balance, your minimum payment amount and the address of your bank.
Minimum payment and late payment warnings
Credit card issuers are legally required to include a warning about late payments and any late fees they plan to charge. Depending on the card issuer, you may also receive a warning about any penalty APRs on remaining balances for past due bills.
Another section you’ll see is a minimum payment warning. This warning explains how long it will take you to pay off your credit card balance if you pay only the minimum with interest. You’ll also see how much you would need to pay toward your credit card bill monthly in order to become debt-free in three years.
Your account activity section may be the longest of your credit card statement, since it includes all payments and credits to your account as well as all purchases. This section will list out each transaction on a separate line, making it easy for you to confirm all purchases and statement credits are accurate.
According to the National Credit Union Association, this is the section you should go over thoroughly to check for fraudulent or incorrect charges. If you do find anything on your statement that doesn’t seem right, call your credit card issuer right away.
This section lists important details to help you understand how much remaining interest you’ll have if you don’t pay your balance in full. You’ll see your current interest rate for purchases, cash advances and balance transfers. Also, take a look at the amount of interest charges levied during the current statement period.
If you want to stop paying interest on your credit card balance, you can bring future interest charges to a halt by paying off your balance completely before your due date.
Total interest and fees paid this year
This is a summary of all fees and interest charges you’ve paid during the calendar year. If these figures seem high, keep in mind that you can avoid fees by paying your credit card bill early or on time without going over your credit limit.
You could save money on interest by negotiating a lower rate, or moving high interest balances to a new balance transfer credit card that grants 0% APR for a limited time.
If you have a cash back or travel rewards card, you’ll find a summary of your earnings on your statement. This section should include how many points you earned in various categories your card offers during the current billing statement. But it should also include the total amount of cash back or rewards points you’ve accrued.
Whether you’re new to credit cards or have years of experience, be sure to read your credit card statement carefully and thoroughly. It’s easy to overlook any important line items that could affect your purchasing activity. So, you want to make sure you’re well aware of the details.