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How to Read Your Credit Card Statement

Sept. 28, 2016
Credit Card Basics, Credit Cards
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Your credit card statement, while not the most exciting document to cross your path on a regular basis, is important to understand. Ideally, you’ll review this document each month, so you should know what information it contains and what you should to pay attention to. Below is a summary of each of the basic statement sections, as well as an explanation of what you should focus on. Remember, while all credit card statements have the same basic information, the data may be presented in a slightly different order depending on your card issuer.

Payment Information

This section tells you your current balance, the minimum payment due and the due date. On some statements, it also includes a minimum payment warning, which explains how long it would take you to pay off the current balance if you made only the minimum payment and how much interest you would pay. That last part should serve as a monster motivating you to pay off your credit card debt. If you just stick to the minimum payment each month, you could easily end up paying more in interest than you charged in the first place.

Our advice: Aim to pay off your entire balance, every month. This may not be possible for you right now, but this should be your ultimate goal when it comes to credit card usage. Credit card debt isn’t cheap debt, so try not to carry a balance.

Account Summary

This section details how your current balance was calculated. It begins with the previous month’s balance, subtracts recent payments and credits, and adds purchases, interest charges and fees to calculate the new balance. The account summary section also includes the card’s credit limit, available credit and cash advance limit.

Rewards Summary

Here’s the fun stuff! This section will be on your statement if you have a rewards credit card, such as a cash-back or travel card. Some statements will detail where your points came from, while others simply state the rewards earned during this billing period.

Our advice: Understand how your credit card’s rewards program works. Redeeming and enjoying rewards doesn’t matter for your credit score, but who doesn’t love cash and potentially free plane tickets?

Information About Your Account

This section  contains legal disclosures, calculation information and instructions on how to deal with errors, among other things.

Our advice: You don’t need to read this part of your statement every month, but go through it at least once to familiarize yourself with your credit card’s policies. You’ll learn potentially useful information, like how your payments are applied or how your balance is calculated.

Payments and Credits

This section lists the payments individually that constitute the total payment number in the account summary. It also lists any credits. If you purchased something and returned it, for instance, the refund would be listed here.

Our advice: Make sure any refunds were processed and any payments you made were applied to the balance. If you pay online — which you should — payments are applied within one to three days of clicking “submit.”

New Charges

This section is an exhaustive list of all the purchases you’ve made during this billing period. At a minimum, this will include the date, retailer and cost. Some issuers have more detailed statements, including location of retailer and/or description of the type of retailer, like “grocery store” or “merchandise.” You’ll spend the majority of your statement review right here.

Our advice: Each month, go through your statement to verify you made each purchase. If there are unexplainable purchases listed, someone may have used your card to make fraudulent charges.

Interest Charges

This section lists your total fees and interest year-to-date, as well as an interest charge calculation for this billing period. It generally lists out each balance type — purchases, cash advances and balance transfers — along with the applicable APR rates, the balance subject to these rates and the subsequent interest charges.

Our advice: Ideally, you won’t be accumulating interest, but check over this data to make sure it’s correct. Also, double check that you aren’t being charged any fees in error. You may have a card with an annual fee, which is fine, but you don’t want to accumulate late payment fees or the like.

This article has been updated. It was originally published May 16, 2014. 

Erin El Issa is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @Erin_El_Issa.

Credit card and statement image via Shutterstock