How to Read Your Credit Card Statement and Avoid Unnecessary Charges

credit card statement

If you’re looking to save money, you could find a way in what might seem the unlikeliest of places — your credit card statement. Here’s how to read a credit card statement to be sure you’re not paying more than you should.

Payment information

This is the bare minimum of what you need to know from your credit card statement — your current balance, the required minimum payment, and your due date.

But please, do not stop there.

Yes, paying your minimum payment by the due date will keep you in good standing with your credit card issuer, but it will also cost you a pretty penny in interest fees. (A review of your credit card statement will show you just how much making a minimum payment will cost you in the long run.)

Even if you decide to pay the balance down to zero, you won’t know if you’re paying for something that’s actually a mistake unless you review your statement. Here’s what else to look at.

Account summary

At a glance, this overview of your credit card activity should be able to tell you if anything major is amiss. It includes your new balance, but more importantly, the account summary displays a breakdown of how your new balance was calculated, including your:

  • Previous balance
  • Payments and credits
  • Purchases
  • Balance transfers
  • Cash advances
  • Fees
  • Interest charged

This section also includes your credit limit and available balance.

What you’re looking for

Is your previous balance correct? Did you get credit for your last payment and that return you made to the store last month? Did you actually make that new balance transfer or cash advance? Are the fees you’re being charged ones you agreed to?

If anything looks off, dig deeper into your credit card statement for details and contact your credit card issuer to report costly errors.

That said, even if your account summary looks fine, review the rest of your statement anyway, as one erroneous charge or fee may not stand out to you in the summary.

This section can also be helpful in changing your credit card behavior. Take a close look at the interest charged. Every penny of that could be avoided if you just pay off your balance every month.

Lastly, always double-check your available balance. You may have less available than you thought, which could save you from making a purchase that will cost you an unnecessary over-limit fee.

Transactions

Checking the accuracy of your payments and fees won’t take long, but expect to spend some time on your charges. Go through your list of transactions line by line and verify everything.

If you only use your credit card a few times a month — and always for the same things — you might remember every transaction on your own. But if you use your credit card a lot, the last thing you want to do is assume you made that purchase that you don’t remember making.

If that’s the case, it helps to have a record of your purchases to check against your statement. Receipts work well; just remember to print or save them for any online transactions. Should you find errors, contact your credit card issuer immediately.

Interest charges

There are a few different aspects of interest charges that are important to double-check:

  • Are you being charged the correct interest rate for each type of balance? It’s usually higher for balance transfers and cash advances than it is for regular purchases, so it’s an important mistake to catch.
  • What have you paid in interest fees to date? If you carry a balance from month to month, this could be a doozy. It could also be just the incentive you need to start paying that balance down, saving you big bucks over the course of a year.

You can also see how much interest you were charged for the most recent billing period.

Account change notifications

When credit card issuers change your fees or interest rates, they are required by law to notify you accordingly — but it’s up to you to pay attention when they do. Though these changes may be included in a separate notification, you can always find them in the account change notifications section of your credit card statement.

Armed with this information, you can make money-saving decisions about your credit card use. The higher interest rates go, the more expensive it’s going to be carrying a balance. The higher fees go, the more expensive it will get to be late with a payment or go over your credit limit.

Warnings

Your credit card issuer is required by law to give you these important reminders every month:

  • Minimum payment warning. This will tell you how long it will take you to pay off your balance — and how much more it’s going to cost you — if you only make minimum payments.
  • Late payment warning. This will remind you of your due date, the late fee you’ll be charged if you miss your due date, and the possibility that your APR will go up as a result.

These can serve as great incentives to pay on time, every time, and pay more than the minimum each month.

Rewards (if applicable)

If you have a rewards credit card, this section will provide a breakdown of your points, including your:

  • Rewards balance
  • Rewards earned
  • Rewards available for you to use

The better you keep track of your rewards points, the more money you can save via cash back, travel, and other rewards perks.

Look beyond your credit card statement

Understanding a credit card statement means realizing just how costly interest fees can be.

If you’re unhappy with your credit card’s high interest rate, ask your credit card issuer for a better one. There’s no guarantee they’ll extend it to you, but it doesn’t hurt to ask. Here’s how to get the ball rolling on a lower interest rate.

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