Do you feel like your credit card statement is in a foreign language? Reading your credit card statement can be confusing.
“Going through your credit card statement can be challenging and time consuming, but reading it in detail every month is an essential part of managing your debt load successfully. If you skim through it, or worse, don’t read it at all, you could be paying extra charges and interest without even realizing it,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“Additionally, you need to be vigilant for errors. They do happen and could be an indication that you’ve been a victim of fraud. You need to be able to identify any questionable transactions and act on them in a timely manner to get support from your creditors to correct the problem,” says Schwartz.
While the location of these pieces of information may vary between credit card statements most of the content is essentially the same. Here are some pointers on how to read your credit card statement.
You are probably already aware that you are required to make your minimum payment every month, but did you know that you have a number of other responsibilities as a cardholder? Many of these have to do with protecting yourself and liability against charges- like not sharing your PIN number or account information and what steps you need to take to dispute errors.
If you’re not already familiar with this information, make a point of reading it on this month’s statement.
This is a list of all of the transactions that you’ve completed during the last billing cycle. You’ll also see any fees or finance charges on the account. Be sure to review these transactions carefully to ensure that they are all legitimate.
If your card is being used by a fraudster, double checking your transactions will help to identify this.
It can help you to track your purchases throughout the month (making note of dates, amounts and vendor) to help you reconcile these. This practice can also help you track your spending.
This information shows your current balance on your card, as well as your credit limit and any over-limit charges. It’s important not to max out your credit cards; if you’ve got several maxed out cards, it will harm your credit score.
Minimum payment and due date
Your credit card company will have calculated your minimum payment for you and listed the due date. To keep your credit rating intact, ensure that you make that payment in advance of the due date, at least by a couple of days.
If possible, you should always aim to pay more than the minimum payment. Much of your minimum payment goes to service interest and doesn’t do much to reduce the principal of your debt.
This information provides you with your annual interest rate. You’ll see either AIR or APR for this, depending on the term that your card uses. To determine what your monthly rate is, divide your card’s AIR/APR by 12.
This can be handy when trying to determine how long it would take you to pay off your whole balance. It’s eye-opening when you calculate your APR/AIR and see exactly how long it would take because of interest charges.
If you get reward points with your credit card, your statement will include a summary of any points or other rewards accumulated during the billing period.
Be proactive with your credit card statement and avoid paying late fees. For these and other tips to stay on top of your debt, call one of our trained credit counsellors at 1-888-294-3130 or visit our online debt analysis.