How to Read Your Credit Card Statement - The Motley Fool

You might be surprised about what you can learn from a close read.

You probably get at least one in the mail every month, but how well do you really understand your credit card statements? Yes, they tell you how much you owe and when you have to make a payment, but there's a lot more hidden in those pages than that. Here's a closer look at what you'll find in a typical credit card statement and where to look for certain information.

Image source: Getty Images

Credit card statement example

Every credit card statement is laid out a little differently, so yours might not look exactly like the one below, but you can expect to find more or less the same information in any statement, regardless of your card issuer.

Image source: Getty Images

Image source: Getty Images

Images source: Kailey Hagen.

Glossary of credit card statement terms

Here's what each of the labeled sections in the images above means.

1. Account summary

Your account summary is an overview of your credit card statement for the month. It tells you all about your monthly credit card usage and how much you owe. Yours may not include all of these things or it may list them in a slightly different order, but usually, an account summary will list:

• Account Number: This is your credit card number which you can use to identify yourself if you contact your card issuer.

• Previous Balance: Your credit card statement typically shows your last month's balance for reference.

• Payment Credits: This is how much you paid toward your credit card balance last month. If you paid the balance in full, this amount should be the same as your Previous Balance.

• Purchases: This is the total dollar amount of purchases you made with your credit card during the billing cycle.

• Balance Transfers: This is the total dollar amount of balances transferred to this credit card from another credit card during the billing cycle. Your card may not include any mention of balance transfers if the card does not permit them.

• Cash Advances: This is the total dollar amount of cash your credit card issuer advanced you during the billing cycle. Your credit card statement might not include this if your card doesn't permit cash advances.

• Fees Charged: This lists the total amount of fees you've incurred this billing cycle, including things like late fees, balance transfer fees, and cash advance fees.

• Interest Charged: If you carry a balance, this will tell you how much that balance accrued in interest over the billing cycle.

• New Balance: This is the new amount that you owe the credit card company based on your purchases, cash advances, and balance transfers from this month plus any balance you have been carrying on the card.

• Past Due Amount: If you haven't been keeping up on your credit card payments, this will tell you how much you are behind on paying.

• Credit Access Line: This is a fancy way of saying your credit card limit -- the maximum amount you can charge to your credit card.

• Available Credit: This is your credit access line minus your new balance. It's how much more you're able to charge to your credit card.

• Cash Access Line: If your card allows cash advances, this will tell you up to how much you can borrow.

• Opening/Closing Date: This tells you which dates are included in this billing cycle. Purchases before the opening date or after the closing date will appear on your previous or next credit card statement, respectively.

• Days in Billing Cycle: This tells you the number of days in your billing cycle. It will usually be around 30.

2. Credit card statement balance and payment information

The payment information section provides you with the most important information about your new balance and your monthly bill, including:

• New Balance: Though it's listed elsewhere on your credit card statement, the card issuer lists it here, too, so you can't miss it.

• Minimum Payment Due: This is the minimum amount of money you must pay to the credit card issuer this month to avoid a late payment fee.

• Payment Due Date: This is the date your payment must reach your credit card issuer by to avoid a late fee.

3. Late payment warning

The late payment warning tells you the maximum dollar amount that you could be required to pay if you don't pay your credit card bill on time. Card issuers usually don't charge you this amount for a first offense. Check your cardholder agreement for more information on late payment penalties for your first and subsequent late payments.

4. Minimum payment warning

The minimum payment warning usually includes a table that helps you understand how long it will take to pay back your balance if you make only the minimum payment. Often, that period is several years -- and that's if you don't charge any more to your card in the meantime. It may also include a comparison section showing how much faster you could pay off your balance if you paid more than the minimum. Some credit card statements also include a phone number that borrowers can call for credit counseling if they are struggling with their credit card debt.

5. Rewards summary

Your credit card statement should have a rewards summary if your card offers rewards. This section contains the following information:

• Previous Rewards Balance: This is how many rewards you had prior to this billing cycle.

• Rewards Earned This Month: This tells you how many rewards you earned during this billing cycle.

• Bonus Rewards: If your card offers bonus categories, it might break out the number of bonus rewards you earned for the month and list them here.

• Total Rewards Available: This is your new rewards balance, including any rewards you earned this billing cycle.

Visit your online credit card account or contact the card issuer by phone to see how much those rewards are worth and what you can spend them on.

6. Important changes to your account

This section highlights changes your card issuer plans to make to your account in the near future. These might be changes that apply specifically to you, like triggering a penalty APR because you've made a number of late payments, or it could be things that apply across the board to all cardholders, like an increase to the APR. 

It should tell you which of your transactions these changes will affect and when the changes will take effect. If you have any questions, you can contact your credit card issuer for more information.

7. Payment coupon

If you pay your credit card bill by mail, cut off this payment coupon and include it with your check. You must also list your payment amount on the coupon. This helps speed up the process and ensures that your payment gets applied to the right account. If you pay your credit card bill online or you have the money debited from your bank account every month, you don't have to worry about the payment coupon.

8. Account activity

The account activity section lists all the transactions you made during this billing cycle, including the date of the transaction, the merchant name, and the dollar amount. Some credit card issuers also attach a reference number to each purchase. That way, if you have questions about a purchase or you suspect you might be a victim of identity theft, you can quickly tell the card issuer which purchase you're referring to.

Those who carry a credit card balance from the previous month and those who did a balance transfer or took a cash advance will find a more detailed breakdown of the fees and interest they incurred in this section as well.

9. Fee and interest totals to date

Your credit card statement may include a brief table summarizing how much you've paid in interest and credit card fees for the year to date. Let this serve as motivation to you if you're trying to pay down your credit card debt.

10. Interest charges

The interest charges section gives a more detailed explanation of how the card issuer calculates your interest. It may have separate sections for purchases, balance transfers, and cash advances if they all have different APRs. You'll also find information on promotional APRs here, if they apply to your account, including expiration dates.

You might see symbols, like (v) or (d) after the interest charges in this section. These are a sort of mini glossary. Some of the most common terms and symbols you might see include:

• Promotional APR: This is a lower APR than the standard APR and it only lasts for a certain number of months after you open the card. It may apply to purchases, balance transfers, and cash advances, or only one or two of these.

• (v): This stands for variable. It means that the card's interest rate is tied to the prime rate or a similar benchmark that may change over time. If it does change, your interest rate may decrease or increase accordingly. The card issuer does not need to notify you about this in the Account Changes section because this relationship is outlined in your cardholder agreement.

• (d): This means your card issuer uses the Daily Balance Method to calculate your interest charges. This method totals up your actual daily balance on every day of your billing cycle and multiplies this by the daily rate, which is 1/365 of your APR.

• (a): This means your card issuer uses the Average Daily Balance Method to calculate your interest charges. This is where it takes the average balance on each day of your billing cycle, adds them up, and multiplies them by the daily rate.

Frequently asked questions about credit card statements 

Here are the answers to a few commonly asked questions about credit card statements.

How can I view my credit card statement online?

You can view your credit card statement online at any time by logging into your online credit card account and navigating to the statement information. If you've opted to receive electronic statements, your card issuer should send you an email every month when your new statement is available. It should contain all of the same information as the paper statements detailed above. 

If you prefer to get your credit card statements by mail, you can choose paper statements instead, though you may have to opt in as more and more companies are transitioning to online statements to save paper.

What happens if I pay my credit card bill before I get the statement?

You can pay your credit card bill at any time during the billing cycle, even before you receive your monthly statement. On your statement closing date, which is usually at least 21 days before your payment due date, your card issuer will calculate your interest charges for the month and your minimum payment. It also reports your payment to the credit bureaus.

If you pay your balance off before this date, your payment will reduce or eliminate your balance and give you more credit to spend in the second half of the month. Making a payment will also lower your credit utilization ratio because credit bureaus only see what the credit card issuers report once per month. When your credit card bill arrives, it should show all of your purchases for the month, plus your first payment. Your New Balance should list your remaining balance for the billing cycle.

If you pay after the statement closing date but before you actually receive your statement, you can calculate what you owe by subtracting what you already paid from the new balance on your credit card statement when it arrives.

Credit card statements admittedly aren't the most exciting reads, but there's a lot of important information packed in them. Hopefully, this guide helps you better understand yours.

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