Home Merchant cash advance How to read your credit card statement – Forbes Advisor

How to read your credit card statement – Forbes Advisor

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When you know what to look for on your monthly statement, it’s easier to keep track of your finances. You will be able to see all the purchases you’ve made, how much you owe, and any rewards or credits you’ve earned. It can also help you report potential fraud on your card if you know how to recognize unauthorized charges.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (or CARD Act) requires issuers to include several key pieces of information on each billing statement to help consumers manage and understand their accounts.

We’ve broken down for you what each section of your statement means and what you need to know about each one. Keep in mind that each issuer’s presentation will likely be slightly different, but all credit card statements will display the same basic information. Here’s what you can expect to find.

1. Account information

This section will contain the basics of your account and should include:

  1. Your name and postal address. Make sure everything is exactly correct, including the spelling, so that it is correctly reported to the credit bureaus.
  2. Your account number. This can be the full account number or just the last four digits.
  3. The dates of the billing cycle. Note that any purchase you make after the bill cycle close date will only appear on your statement on the next month’s bill. If you check your statement online, it will show any pending or new charges as they appear on the next month’s bill. The dates of your billing cycle help determine how your interest is calculated.

2. Account summary

This section summarizes all of the transaction information on your card such as purchases, payments, and other fees.

  1. Payment deadline. Issuers are required to have your due date on the same day of the month each month and allow at least 21 days to make a payment after that month’s statement closes.
  2. Payments and credits. If you have made payments or received credits on your account, this will be reflected on your statement.
  3. The total amount of your overall balance. This is the amount you owe to pay your bill in full.
  4. Other expenses. If you have been charged late fees, over limit fees, foreign transaction fees, or balance transfer fees, this will also be shown on your statement.

3. Purchases

You should see a detailed list that takes into account each time you’ve used your card to make a payment. This will include:

  1. The date you used your card. Sometimes the date displayed may be a day later than the actual date of the transaction. Your statement can show you both dates or just the posting date.
  2. Name of the seller. Some vendors may do business under a different name than what you might see on their site or store. If you see an unfamiliar name, you can call the number on the back of your card and ask them for more information.
  3. Merchant category. It would say something like “Grocery” or “Travel”. All suppliers that accept credit cards are assigned an MCC code, which identifies the type of establishment they are. If you have a rewards card, this code is how your card “knows” if you have used your card at a location that pays high rewards.
  4. The amount debited from your card. Note that for catering fees, you will sometimes see two separate transactions: one for the invoice and one for the tip.

4. Payment information

Your statement will also provide information on any balance you have accumulated. This includes:

  1. The total credit card balance. This is the total amount that is currently charged to your credit card. If you repay this amount, your card will have a balance of $ 0.
  2. The minimum amount of payment due. This is usually calculated as a percentage of your balance or a percentage plus interest and fees. If your total balance amount is small, you may be charged a fixed amount, typically $ 25 to $ 35, or be asked to pay the balance in full if what you owe is still less than the fixed amount. If possible, try to pay more than the minimum amount owed each month.
  3. A calculation on how long it will take to pay off your balance. Issuers are required to show you how long it will take you to pay off your total balance if you only make the minimum payments each month. Most also show you how much faster you would pay it off and how much you would save if you paid more than the minimum amount each month.
  4. Credit available. This is the amount of credit you have left in the account until you reach the limit. If possible, aim to use 30% or less of your available credit, otherwise it can negatively impact your score.
  5. Total interest and fees paid this year. Your issuer is required to tell you the amount of interest or charges you have paid so far in that year.

5. Small print account

There should be a long section in fine print with the following information:

  1. Contact information. This should include how to contact your issuer by phone, post, and online.
  2. Your basic rights as a cardholder. These sections will include acceptable means of making payments, note that your account information is reported to the credit bureaus, and what to do if you believe there is an error on your account.
  3. Explanation of the interest rate. There should be a paragraph explaining how that particular card calculates the interest charge on the portion of your balance subject to finance charges. There should also be a separate section explaining how to avoid paying interest charges, the summary of which is paying your balance in full and on time each month.

6. Interest charges

This part shows the APRs for the different ways you can use your card, including:

  1. Purchases. Most credit cards have variable APRs, so this may have changed a bit from the original number you were approved for depending on movements in the prime rate. Variable APRs rise and fall as the prime rate changes.
  2. Cash advances. Most cash advances come with a much higher APR than purchases. For this reason, it is almost always better to try and use other means to get money than to take a cash advance on your credit card.
  3. Balance transfers. If you’ve made balance transfers on the card, you’ll see what the interest rate you’re paying on the amount you’ve transferred is. Typically, the APR is the same as the rate you get for purchases, unless you take advantage of an introductory 0% APR offer for balance transfers. This section should also indicate the expiration date of your balance transfer offer.

7. Awards

If you have a card that earns you cash back or other rewards, there should be a summary of your activity for the billing cycle. You will usually see:

  1. Balance of rewards before this month. These are all of the rewards you have accrued prior to this billing cycle.
  2. Rewards earned during this period. This will reflect all rewards earned during the most recent billing cycle.
  3. Rewards redeemed.
  4. Amount available for redemption. The only thing better than earning rewards is redeeming them and here you will see how much you can cash out. However, with some travel rewards cards, there may be better ways to redeem your rewards than for the redemption options listed, such as the Hunt for Ultimate Rewards transfer to airline and hotel partners.

Knowledge is power, and knowing what’s going on with your credit card statement gives you the power to understand where your monthly payment is going and the tools to help keep your credit on track.


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