Consumer Credit Card Statement Explained
Applying for a credit card is pretty simple and straightforward – name, address, personal information, and then click “submit.” Using the card is easy, too – just swipe and sign. But when the monthly statement comes, there is so much data that most people are confused and sometimes, frightened.
However, there is nothing in the statement that was not outlined in the terms and conditions of the application, which you read, of course. But it’s good to review the terms used on the statement and become familiar with them. It’s easier to spot changes in the terms and conditions when you know what to look for.
APR – Annual Percentage Rate (APR) is the interest rate at which the company will charge for carrying a balance on the account. Some cards have fixed APRs and others have variable APRs. A variable rate means that the institution can change the rate any time without warning.
This is what usually separates the responsible users from the abusers. Miss a payment or make several late payments and that rate can soar from 12% to 22% in one month’s time. And because you agreed to the terms and conditions when you signed up for the card, there is nothing you can do about it.
Due Date – Pay attention to this and the APR should remain the same. This is the date that the payment has to be in the hands of the institution. Not the postmarked date – the date in which they have to have it posted to your account before it’s considered late. One day late, and it’s still a late payment. Don’t blame the post office for your tardy mailing, either. The credit card companies don’t buy that excuse.
What is the due date is on a Saturday or Sunday? Better have it there by Friday at 2:00 p.m. their time zone. If they aren’t open on Saturday or Sunday, they’ll post your payment on Monday and it will be late. If you have a problem making the due date because of your pay schedule, contact the credit card company and see if they’ll let you change your billing cycle. Otherwise, you’ll need to get disciplined enough to pay ahead of schedule.
Minimum Payment – The minimum payment due is the amount you need to pay to keep your card account current. If the amount due is $21, then pay that exact amount or round up to $25. If you send $20, then you won’t get credit for making a full payment and they can penalize you. And yes, they will over even a single dollar. It’s written in their terms and conditions. Whenever possible, pay more than the minimum due. It’s a good faith move on your part to show that you are truly making an effort to pay the debt.
Remember, too, that the credit card company keeps this payment low. The longer it takes you to pay the debt, the more money they make in interest. Most minimum payments are about 2% of your balance, which means it’ll take a minimum of five years to pay even the smallest balance.
Credit Limit – Each monthly statement will show the credit limit of your account, which is the maximum amount that you can charge. The amount is based on your credit history and may be increased periodically. It can also be zeroed out if you develop a bad payment history.
Exceeding your limit will usually result in an Over Limit Fee being assessed – at an average of $39 per billing cycle. Your credit card can also be denied for purchases when you max the limit. Either way, it’s a costly mistake.
Bonus/Reward Points – Credit cards that accrue bonus and/or reward points for you will often post the current month’s activity and the balance of your points on the statement. When you redeem any points, that activity will show up on the statement as a deduction and the new balance of your points. If you notice points that are not credited to your account, you need to contact the customer service department for assistance.
In addition, if you have any questions about terms on your statement or note changes to the account, the customer service telephone numbers are listed on the front as well. Most representatives are trained well to handle any questions or concerns that card holders have regarding their accounts. It’s better to ask than to pay the price unnecessarily.
Quick Tip #1
Although it may be overstated, there is a lot of truth to people ruining their credit score due to missing payments and
paying their credit card bills late.The fees can pile up and the interest rates can grow before you know it.
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Quick Tip #2
Never let your cards go out of your sight and always check your receipts and your card statements thoroughly.
These are simple ways to prevent credit card fraud happening to you. If you do see a suspicious credit card statement,
then call your credit card company straight away and cancel your cards. |
Quick Tip #3
Today’s cards offer a wide range of excellent features, including frequent flier points, programs that bank points toward a new car
and cards that support charitable organizations. Other options worth having include car rental insurance coverage, trip cancellation coverage
and extended warranty coverage. |
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