How to Read a Credit Card Statement

A credit card statement gives you a detailed account of all the transactions you made in your previous billing month. This includes purchases, payments, refunds, credits and any interest you may have incurred. A credit card, as defined by Canada.ca is “is a card that lends you a limited amount of money to pay for goods and services. You must pay the money back by a certain date.”

The purpose of the credit card account summary is to indicate what you owe and the date the money is due. It’s also an opportunity for the credit card holder to reconcile all his or her activity and dispute any charges with the credit card issuer.

Credit cards provide interest-free loans from the date of purchase to the end of that month’s billing cycle. That means you have a minimum window of 21 days to pay for your credit card bill in full before incurring any interest.

The good news is the majority of Canadians (58 per cent), according to the Canadian Bankers Association pay their bill in full every month. Meaning, the vast majority of Canadians pay zero interest on the purchases they charge to a credit card.

What is in a credit card statement?

If you’re reading your credit card statement in detail for the first time, here is what you should look out for.

Account information

You statement will include your account number at the top. It will also detail the interest rate you have agreed to pay if you don’t pay your bill in full by the due date. Please note, interest is charged on the entire amount of purchases you made in the previous month, if you don’t make the payment in full by the due date. Credit card debt can be very expensive to carry, as rates are often above 19 per cent. Additionally, interest is charged daily. So the interest costs can add up quickly. Remember, failing to make the minimum payment by the deadline can result in a note on your credit report and a lower credit score.

Account summary

Your credit card statement will detail all the transactions you made that month. This includes all purchases, returns, payments and interest and fees paid. It shows the date the purchase was made and when the charge was applied. It gives you details of where the purchase was made, too. Some credit companies also indicate the purchase category. For example, grocery, gas, and travel, to name a few. All of this helps to reconcile and check that the purchases were made by the card holder.

Payment information

The statement also shows all your payment information. This includes the date the payment is due and the minimum payment requirement. By law, federally regulated credit card issuers are must show how much time it will take to pay off your balance if you pay only the minimum amount.

Credit card rewards

Credit cards that come with reward or loyalty points also show details on how much loyalty you have earned and what your balance is. In some cases, it will also show what you redeemed in the previous month. This can include travel rewards, hotel points, grocery loyalty points and cash back rewards, to name a few.

How to Dispute a Credit Report Error

If there is a charge on your statement that you did not authorize, it’s important to call the credit card company’s billing department immediately. You may be forwarded to the fraud department if your card has been compromised.  If the charge is incorrect, the company will reverse the charge. If it was fraudulent, the credit card company will most likely cancel your card to prevent further illegitimate purchases. They may also open an investigation into what happened.

Having access to a credit line on a card is a big responsibility. Making sure you know the amount of interest you’re paying if you are only making the minimum payments should be a priority. Always try to pay your balance in full or at least pay more than the minimum. Canadian credit card companies must provide transparent and clear payment information on your credit card account. It’s the credit card holder’s responsibility to read the statement each month to keep his or her personal finances in check.

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