How to Read Your Credit Card Statement

You are probably getting a number of credit card statements each month. They can be confusing. Each one has essentially the same information, but it isn't always presented the same way.

Instead of tossing them into the recycle bin on arrival, use your credit card statements as a money management tool. We’ll show you how.

What is a credit card statement?

A credit card statement tells you what’s been happening in your credit card account since the last statement period ended. Credit card statements may look boring or difficult to understand, but they are designed to tell you everything you need to know.

Statement formats

Each credit card company gets to lay out its statements as it pleases. So, credit card statements may look different when they come from different financial institutions. In fact, credit card issuers are required by law to display certain information on your statement. Once you understand what you’re looking at, you’ll be able to understand any credit card statement from any card issuer.

When your credit card statement doesn’t arrive

There are a couple of circumstances where a card company doesn’t have to send you statements:

1. Your account balance is $1 or less

2. The company has started delinquency collection proceedings against you

3. You opted out of paper statements when you logged into your account online

If your statements are not showing up and the above reasons don’t apply, call your card issuer to ask why. You can also contact the issuer by sending an electronic message while you’re logged into your account online. Don’t send any written communications to your payment address, however. It won’t get to the right place.

Also, if you’ve opted out of paper statements but changed your mind, you can request to be opted back in.

What is on a credit card statement 

Here are the top 10 things to know about your credit card statement.

1. Summary of account activity – Everything that’s happened during your last billing cycle (new charges, payments, and credits). You’ll also see fees and interest charges applied, amounts past due, and any balance transfer and cash advance balances. Your available credit is your credit limit minus your balance and is the maximum amount you can charge to your card.

2. Payment information – The minimum payment (the least you can pay while keeping your account current), and the date on which your next payment is due. Be sure your card issuer receives your payment on or before that date or you may risk incurring late fees and a higher penalty rate, as well as harming your credit score.

3. Late payment warning – Penalties if your payment is late.

4. Minimum payment warning – A reality check about making the minimum payment. Although you’re entitled to make only the minimum payment, this part of your credit card statement shows the long-term cost of doing so. You’ll see how long it will take you to pay down your balance and how much you will pay in interest charges.

5. Notice of changes to your interest rate – The credit card issuer must give you 45 days’ notice of a rate increase. Credit card interest rates are variable. That means they can and do change as the financial landscape changes. When interest rates go up, you can expect your credit card interest rate to follow suit. One exception - if you do something to trigger a penalty rate, no notice is required.

6. Other changes to your account terms – Changes to expect at least 45 days in the future. Those may include a different fee structure as well as interest-rate changes.

7. Transactions – All the transactions that have occurred on your card since your last statement. Be sure to check them all to ensure you recognize them as correct. If you have authorized users on your account, ask them to similarly check their transactions.

8. Fees and interest charges – The fees and interest charged during the billing period. Those fees might include ones for late payments, balance transfers, and cash advances.

9. Year-to-date totals – The amount you’ve paid in fees and interest so far during the current calendar year.

10. Interest charge calculation – Purchases, balance transfers, and cash advances may each have a different interest rate. This indicates the applicable rates and shows the portion of your balance to which each is applied.

The 4 most important things to read on your credit card statement

You should check these four important bits if you have time to skim your credit card statement.

1. What is the balance?

Always be aware of how much you owe on each card. 

Track the direction your balance is taking over time. If it’s rising, that may be a sign you’re falling into levels of debt that could become unmanageable. 

Remember that having a balance that’s too high relative to your credit limit will harm your credit score. You want your balance to be as low as possible. If you do need to carry a balance, focus on lowering it a little more each month. For a top credit score, aim for a 10% credit utilization ratio (your balance compared to your credit limit).

2. What is the minimum payment?

Your minimum payment is the least you can pay without risking a penalty rate and late fees. But it’s a bad idea to get into the habit of making only minimum payments.

That’s because if you make the minimum payment only, it will take you ages to pay down your balance. And you’ll pay appreciably more in interest charges over time.

Here’s an example:

So, you should make minimum payments only as a last resort.

3. When is the payment due?

You must get your payment into your card issuer’s hands on or before the due date. Otherwise, you could be subject to late fees and perhaps a penalty annual percentage rate (APR).

In 2022, the Consumer Financial Protection Bureau (CFPB) estimated that credit card issuers charged $12 billion in late fees in 2020. These fees are often $30 for your first late payment, rising to $41 for any repeat event during the following six months.

The easiest way to avoid late fees is to set up automatic payments. This gives your card issuer permission to electronically take payments directly from your bank account. You can set it up for a specific amount, for the required minimum, or for the entire balance. 

You can also pay by mailing a paper check, or by logging into your credit card account and manually making the payment at the time of your choosing. Either way, it’s up to you to make sure your payment is received by the due date (or the next business day if your due date falls on a weekend or holiday).

4. Are the transactions on the statement accurate?

It’s in the list of transactions that you might spot the first signs of identity theft. You might also discover:

• Zombie transactions for services you signed up for but no longer use, or expired free trials that you never wanted to pay for

• A merchant has charged you the wrong amount by mistake

• A payment you made wasn’t credited to your account

• You were charged by the credit card company for an option service that you didn’t sign up for

• You were charged for something after refusing to accept delivery

• Unfamiliar or fraudulent charges

Errors may be more common than you think. 

You have 60 days from the statement date to request correction of errors you find on your billing statement.