When your credit card bill arrives, do you take the time to look it over thoroughly? Or do you peak at the minimum payment due with barely a glance at anything else?
Thanks to the Credit CARD Act of 2009, statements are now streamlined and largely uniform. They also provide vital information that can help you manage your credit wisely and even signal when your best credit card may be losing some of its luster.
Understanding your credit card statement
If you haven't been paying attention to your bills, now is the time to start. Here is what is important to know about the main sections of your credit card statement.
- Account overview: This section includes your account number, billing period and due date.
- Balance summary: Your card issuer may call this section a summary of account activity or something similar. In it, you will see your previous balance followed by a list of your payments, total purchases, fees and interest. This section also lists your total credit limit as well as your available limit.
- Payment information: If you scan your bill, this is probably the section you are most likely to review. It includes your current balance, minimum payment due and due date. It also includes a warning about late payment fees as well as a box that outlines exactly how much you'll end up paying if you only make minimum payments. For comparison purposes, the box will also include how much you would save should you pay, for example, $50 a month more. This figure is only for illustrative purposes and you can, of course, pay however much extra you'd like each month.
- Important information: Below your payment information and balance summary, look for important notices. These may include changes to your card terms or warnings that your interest rate may be increasing. Under the CARD Act, issuers must give you 45 days notice before increasing your rates -- plenty of time to shop around for a new lower rate card. If you have a rewards credit card, this section may also be where you'll find a summary of your rewards points.
- Account activity: Here's where you will find an itemized list of all your transactions from the past month. You'll want to review this list carefully. If you don't recognize any of the charges, there should be information on the back of your bill regarding how to file a dispute.
- Interest charge summary: This section will list your current interest rate and how much you were charged last month in interest. For many cards, you may have separate interest rates for purchases, balance transfer offers and cash advances.
- Year-to-date totals: Finally, your statement will have a box listing the interest and fees you've paid so far this year. If these numbers seem astronomical, it may be time to start reviewing the credit card offers in your mail box to find a better deal.
Your credit card statement includes some important information so don't skip a monthly review. Taking five minutes to go over your account details can help avoid identity fraud by verifying purchases and assure your account isn't about to get hit with a higher interest rate or fees.