Best Practices, How to Read Your Credit Card Statement

Do you read your credit card bill when you receive it?  You should review it for several reasons:  to verify transactions and payments; pay attention to the date due, amount due and minimum payment; look for fees and penalties; and note credit line/ limit and credit available.   

Transactions and payments

Verify the transactions on your bill including items charged by matching them to your receipts or at least review the list for anything you don’t recognize. Whatever you can’t verify, contact the credit card company to get more information to determine if you need to dispute it. Confirm the payment on the statement with the amount you sent either by check or online bill pay.

Due date, amount due and minimum payment – Hint…the due date is not a suggestion.

Make sure to allow enough time for your payments to be received, processed and clear the bank. If you are mailing your payment you have to allow additional time for it to be received, which is at least a minimum of 7 business days.  Online bill pay usually takes about two days to be posted. The amount due is listed along with the minimum payment. If you pay the minimum or a portion of the balance due, you will incur interest charges. There is a fairly new section on the statement, thanks to the CARD Act, that includes how long it will take to pay off the card balance, if you only make the minimum payments.

Fees and penalties

Look for fees charged by the credit card company such as late fees, interest, and additional penalties. You need to understand the reason you were billed for these and how to avoid them in the future. For example, late fees can be $35 added to your bill each time you are late. In addition, the interest rate can increase and possibly double, because you have paid late. The fine print explains how your balance is calculated and how payments are posted.

Credit line/credit limit and credit available

The bill also lists the credit line/limit which is the maximum you can charge on the card. It also lists the credit available or how much you can charge. This is the difference of your credit limit and the amount you owe.

You don’t want surprises on your bill and you need to be aware of the penalties. Your bill contains lots of information, which is mainly in fine print which can be intimidating. Most importantly, don’t ignore you bill, pay it on time and in full if possible.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Money & Identity, Saving Money

This post was written by John Ulzheimer