Decoding Your Credit Card Statement: What Are You Really Paying?

You probably get a credit card statement each month. You read the total amount due, the minimum payment due that month, write a check for the amount you can pay, and move on to the next bill.

However, that credit card statement contains a lot of information – transaction history, interest rate, past due payments, late fees and other information – that describe your buying history for the last 30 days. And, if you don’t know what all of those numbers mean, you may be paying more than you have to for the convenience of using plastic to make charges.

1. Open your credit card statement as soon as it arrives. Don’t just add it to the pile of bills to be paid without opening it and carefully scrutinizing every purchase. Check each transaction to make sure it’s actually one of your purchases, that the dollar amounts of purchases are correct, and that there are no unexplained charges listed on your statement. If you do find a charge that you didn’t make, notify the card issuer, close the account and start with a new card and a new card number to prevent further damage to your credit history. Credit card issuers will limit your losses in cases of credit card fraud, usually to a maximum of $50. However, this assumes that you quickly notify the issuer of suspicious activity. The longer you wait to check your statement, the more chances there are for your credit card to be used by total strangers to buy things from Taiwan to Timbuktu.

2. Check the payment due date. When is payment due? Late fees can run as high as $35 for each late payment, and that’s money out of your pocket. Stay ahead of payments to prevent late fees. If payment is made by check via snail mail, allow enough time for the check to arrive at the card issuer’s office to avoid late fees. Paying through Online Banking can be one way to make sure that payment is delivered on or before the due date.

3. Check your interest rate. You may have signed up for a locked-in credit card interest rate of 12%. However, buried in the fine print may be a clause allowing the issuer to raise your interest rate if you miss a single payment, or make a single late payment. That 12% rate may suddenly increase to 29.5% with one late payment. And it can take up to six months of on-time payments for that rate to drop back down to the 12% you signed up for. Pay on time and keep your credit card interest rate as low as possible.

4. Check your balance summary. Your credit card statement includes a balance summary – the total of all transactions charged to the card, fees and interest, and your last payment and when it was posted. Credit card companies sometimes make mistakes. A payment may have been lost in the mail. Or, you may have a question about a transaction that’s in dispute. The card issuer should indicate all credit card activity – charges, payments, posting dates, fees, interest – all in a simple-to-read box labeled Balance Summary. Pull out the calculator to make sure you aren’t being charged more than you should be.

5. Check your rewards information. Some credit cards offer incentives: frequent flyer miles, cash discounts on purchases or lower rates on hotel/motel accommodations, for example. Make sure your rewards credit card delivers the rewards you expected. If not, pick up the phone, call customer service and find out why you didn’t receive your reward points that month.

6. Check the Finance Charge Calculation. Your credit card issuer provides all the information you need to determine just how finance charges are calculated. This includes interest paid on outstanding balances, interest on balance transfers moved from one card to another, and interest paid on cash advances made using your card. Routine purchases are charged the lowest percentage rate, while cash advances usually have a higher interest rate.

It’s your responsibility to protect your credit card information, all contained in the monthly credit card statement. Read it carefully and contact the card issuer whenever something is confusing. It’s just smart money management.

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC