Understanding The Monthly Credit Card Statement – Part 1

If you go to the mailbox and find your credit card statement, and immediately get the last month’s statement and sit down with them and compare APRs to make sure you didn’t get an increase, and look at all of your purchases to make sure the charges are legitimate, what are you doing here? You don’t need any help. I’m looking for the guy who opens the statement a week after it arrives and looks immediately at the minimum payment option. I’m looking for the guy who takes a week to look at the statement, then takes a week to write the check, and then takes two weeks to mail it because he can’t find a stamp, and he misses the due date. You need to be here. Every credit card has a different statement with a different layout, but most of them have the same information. Learning to carefully read the statement when it arrives is one of the most useful ways to learn credit card responsibility. The numbers are sobering, and we all need a bit of that. Let’s consider the different numbers that appear on your statement and what they mean. If you are going to look at one number first, find this one – the Payment Due Date. Paying on time is the single most important factor in maintaining good credit. Pay late or miss a payment entirely and you may find that your interest rate increases, and your credit rating slips. Once you know when the payment is due, the next number to seek out is the Balance Due. If there is a corollary to the “pay on time” rule it’s this – pay off the entire balance when necessary. Look at the number and decide if you can reasonably and responsibly pay the entire amount. Many people can’t pay the entire amount, but it’s expensive to pay interest on a high balance. There will also be a heading called Previous Balance. Compare that number to the current Balance Due. Are you gaining ground or losing ground? If you are gaining ground, that should encourage you to gain even more. If losing ground, was there an important reason for this, or did you just spend too much? It’s good to take stock of this situation at least on that day of the month when you receive the statement. Purchases or New Charges will give you a listing of every purchase you made in the past month. Some people will urge you to save every receipt and scrap and review the numbers on them against the statement. You may not have the willingness to do this, but at least look at each transaction and see if it is as you remembered it. If not, check it out. This guide to understanding your credit card statement is continued in part 2.