Anyone who has ever swiped their credit card at a merchant knows how easy it is to use the device for a purchase, but correctly reading a credit card statement can be more complicated. When the statement comes in the mail or through email, understanding your purchase and payment activity becomes a bit more difficult. You might be asking yourself — how do I read my credit card statement?
Your eyes might focus on three primary pieces of data: the credit card balance, the minimum payment and the due date. That’s an excellent start, but there’s a lot more information to take away when you break the statement down piece by piece.
If you use a rewards card, you’ll want to make certain you’re properly credited with points or cash back for eligible purchases. If you’re carrying a balance, you’ll want to pay attention to the card’s annual percentage rate (APR) since that figure will determine the amount of interest being charged. Keep reading to learn more about what to look for on your statement and how to interpret the information.
What to look for on your credit card statement
It’s important to understand all aspects of your credit card statement. While some sections are less compelling than others, not recognizing warnings and disclosures could put a crimp in your cash flow and a dent in your credit score. When you open a mailed statement or view it online, there are four main sections that will stand out:
- Summary of Account Activity. A snapshot of all the relevant card activity and corresponding balance appears under this block.
- Payment Information. This section outlines what you owe and due dates.
- Transactions. Here you’ll be able to view what was purchased in the prior month and any applicable interest charges or fees.
- Interest Charge Calculation. If you do have a balance, this part is where applicable interest charges are figured and displayed.
Understanding what information these sections contain and how to read them can give you a better picture of your financial health by helping you track how much you spend in certain categories, as well as highlighting how much you’re paying in fees each month.
What your payment information tells you
Analyzing the payment information section in more detail, you’ll find your new balance, any amount past due, due date and your minimum payment information. Beneath those facts and figures, a late payment warning outlines the applicable penalty if your minimum payment is not received by the due date.
The minimum payment warning emphasizes the consequences of only paying what’s required. Essentially, you will pay more in interest, and it will take longer to erase your balance than if you pay a higher amount each month.
Finally, the credit issuer will list a number where you can reach out for credit counseling if necessary. And a pre-addressed payment coupon will allow you to route your debt obligations to the correct address.
What your account summary tells you
The account summary provides a look at the nuts and bolts of your credit card program. At the top, you will see a ledger that shows your previous balance and any payments or other credits debited from that balance. The next four line items will reflect charges incurred. These categories include purchases made, cash advances, applicable fees and interest charged. The last line totals your new balance as adjusted by those credits and debits.
In the same box, your credit limit will be exhibited along with available credit, a statement closing date, or the date when your current billing cycle ends and the number of days in that billing cycle. If you need to make any changes to personal profile data, instructions to update your info will also display here.
What your rewards summary tells you
If you own a rewards card, an additional section will appear to give you summary data on cash back, points or miles. If we take the example of cash back incentives, an opening balance will display. Any rewards earned for the previous billing cycle will add to that amount, and any redemptions you’ve made will occupy a line as well. This card will give you a new balance, and if you’ve redeemed cash back as a statement credit, that amount will populate as a credit in the account summary as well.
Transaction history and credits
Your transaction history dives into the details of each purchase made in the previous billing cycle, and any credits from returns or point redemptions, for example, have their own line in this spot. This section usually occupies the most physical space on your statement — when you’re actively using the card. This entry allows you to scour specific transactions for incorrect amounts or outright unauthorized purchases, which you then may dispute via customer service whose contact info will be listed under a “Questions” header.
Total interest and fees
Every month, you’ll get a breakdown of interest and fee expenses for the previous period. Still, the total interest and fee layout on your statement will also show you the year-to-date summaries of those costs. This glimpse can be helpful for consumers contemplating a balance transfer or for business owners analyzing deductions at year-end and prepping for tax season.
The bottom line
The fun part of credit card ownership is using the card to buy things you want and possibly earning some rewards along the way. Unraveling all the sections of the card statement might be a little less appealing, but it’s imperative for monitoring spending habits and keeping a close eye on transactions. There is an adjustment period , but the more details you know, the more information you have to help improve your financial standing and creditworthiness.