Understanding a Credit Card Statement
Fully understanding a credit card statement can be confusing even for experienced cardholders, especially when reading one from a new card issuer for the first time. Credit card statements contain a lot of information on a single page, and much of it is not adequately labeled or explained. While most people tend to ignore this information, it is always beneficial to review the statement each month to detect identity theft or clerical errors that could negatively affect the credit score.
Basic Information
Every credit card statement contains basic information such as the full name of the cardholder, the credit account number, and statement date. While it may seem useless, this seemingly obvious information can come in handy. Sometimes card purchases will not be approved because the name on the purchase does not match the exact name on the card. In such a case it may be necessary to refer to the full name as it appears on the card statement. When filing a dispute or contacting the credit card issuer about an inquiry, it may be necessary to have the account number ready as well.
Understanding Statement Dates
When reading a statement, the transactions listed pertain to any purchases made between the date of the last statement and the current one. The payment due date indicates the date on which the credit card company must receive payment. It is important to note that it usually takes several days for payments to process, so it is best to issue payments at least a week before the payment due date to avoid late penalties.
Balance and Transaction Information
Credit card statements display the current credit line of the account. Ideally, to maintain a healthy credit score, it is best to never exceed more than 70% of the available credit limit. Fortunately, nearly every credit card statement will also display how much of this credit line is still available, which makes it easy to avoid over-the-limit fees.
The new balance field displays how much is currently owed to the credit card company. Paying the entire new balance will completely eliminate interest charges for that statement period, while every dollar left over will accrue interest. The minimum amount due indicates how much of the balance can be paid without penalties being charged. To keep a good credit score it is best to pay at least twice the minimum amount each month.
The transactions list displays in detail all purchases made during the statement period. Fully understanding this section of the credit card statement is vital when accounting for monthly expenses and creating a budget. Most credit card statements also contain more advanced information that explains how interest is charged, when the next statement will be issued, and other detailed aspects of the credit account.
If in doubt, the best way to get a firm understanding of the credit card statement is to bring it into a local branch and have the account manager explain each field.