Do you feel a tad bit confused when you look at your credit card statement? If so, take a look at this quick guide to understanding your credit card statement.
Purchases and New Charges
If you saved all of your receipts over the past month, which is a practice you should begin if you haven’t already, you can then compare your charges against the statement to make sure they are accurate. In addition, you can verify that all of the charges were actually made by you and not by an identity thief. If you notice a problem on your credit card statement, make sure to contact your credit card company immediately.
Payments and Credits
In addition to the charges on your credit card, you will also find a section showing you how many payments and credits you have received on your credit card. This includes the money you have sent in to pay on your bill as well as the credits merchants placed on your credit card from returned items or errors.
Previous Balance
Your previous balance will also be found on your credit card statement. By looking at your previous balance and comparing it to your current balance, you can determine if you are getting ahead or if you are only digging your debt deeper each month.
Finance Charges
You will also find a section on your credit card statement that tells you how much you are paying in finance charges for that particular billing cycle. In many cases, you won’t have to pay finance charges if you are paying your balance off completely at the end of each billing cycle. Some credit cards, however, start charging finance charges as soon as you make a charge. Take a look at how much you are paying just for the luxury of charging your purchases and you might want to reconsider your spending habits – or find yourself a new card.
Grace Period
Your credit card statement will also tell you how long your grace period lasts. The grace period is how long you have before interest rates start building from your credit card balance.
Cash Advances
Credit Limit
The credit limit, as the name implies, lets you know how much you can charge on your credit card. Make sure to never go over your credit limit. In addition, you should leave plenty of room on your credit card in case of emergencies. Where your credit score is concerned, you should keep your balance much lower than your available credit. Once you owe more than half of your limit, you run the risk of negatively impacting your credit score.
Minimum Payment
The minimum payment portion of your credit card statement tells you the very least amount of money you need to pay on your credit card for the month. If you owe more than the minimum payment, try to send more than just that amount. Otherwise, it may take you years to get out of debt. If you cannot afford more, however, make sure to pay at least the minimum payment. If you do not, your payment will be considered late and the resulting report to the crediting agencies will harm your credit score.
Due Date or Pay-by Date
The due date or pay-by date is the date by which the credit card company needs to receive your minimum payment. If you do not send your payment in by this time, you will most likely be charged a late fee and will receive a negative rating on your credit score.
Fees
You might also find fees on your credit card statement. If you went over your limit, you will see an over the limit fee. If you did not pay your bill on time, you will find a late fee. If you completed a balance transfer or a cash advance, you might also find fees for these conveniences. Check these fees to make sure they are accurate and notify the credit card company if they are not.
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