Credit cards are an important part of many adults’ day-to-day finances. Not only can you use them as a form of payment, but you can also earn cash back and other rewards! However, they require some effort to understand and use responsibly.
The first step toward responsible credit card use? Learning how to read a credit card statement.
If you’re thinking, ‘Back up. What is a credit card statement? And how do credit card statements work?’ We got your back. Credit card statements are monthly reports that show your balance, minimum payment, and transaction details. Reviewing this info helps you stay on budget and pay bills on time.
6 components of a credit card statement
Let’s cover the basics. There are six elements of every credit card statement. Here’s what you need to know about each:
1. Statement balance and minimum payment
Most credit card statements put the most important information at the top. This includes your statement balance — the total amount of money you spent during the statement period — and your minimum payment — the minimum amount you have to pay back.
2. Statement period and due date
Let’s talk timing. The statement period is the period of time covered by the statement — typically one month. So, if you open your credit card on November 1st, you will likely receive your first statement on December 2nd. The statement will include all your transactions from November 1st to December 1st — aka the statement period.
The other important date on each credit card statement is the due date. You must pay the minimum payment, if not the entire balance, by this date. The due date is typically a few weeks after the statement period ends.
Pro tip: Set up automatic payments so you never miss the due date!
3. Account summary
The first page of each credit card statement typically includes an account summary. The summary shows your previous balance, payments, new charges, fees, credit limit, available credit, and interest charges.
Whew, that’s a lot of terms! Let’s review:
Previous balance: The balance that was left over after your last statement. If you pay your balance every month, this will be $0.
Payments: Any payments you made during the statement period.
New charges: The charges you incurred during the statement period.
Fees: Any fees you paid to the credit card company during the statement period. Some credit cards charge annual fees, which would be included in this section.
Credit limit: The maximum amount you’re allowed to charge to the card.
Available credit: The difference between what you spent and your credit limit.
Interest charges: The credit card company charges interest if you don’t pay off your monthly statement balance. The account summary will list any interest charges incurred during the statement period.
4. Rewards and points
Some types of credit cards offer rewards — like redeemable points or cashback. Each statement includes the rewards you earned during that period.
5. Interest charges
While interest charges are typically included in your account summary, they also get their own section.
So, how are interest charges calculated? Interest is a percentage of the previous statement balance that you didn’t pay off. For example, imagine you don’t pay off $100 from last month’s balance. Your credit card will charge an interest fee on that $100. Say the interest rate is 15%, so your fee is $15.
Greenlight tip: Keep track of your credit card usage throughout the month. This will help you stay within your budget and feel confident paying off your statement balance. No need to owe interest charges if you don’t have to!
6. Transaction details
The transaction log takes up the majority of a credit card statement. It includes each payment amount, who it was paid to, and the date.
How to read and analyze a credit card statement
Now that you know what a card statement is, let’s cover how to read it. And how to get a credit card statement in the first place.
1. Download the statement
Log in to your credit card account and select your latest statement. Feel free to download or view it in your browser or app. Credit card companies may additionally mail or email a copy of the statement.
2. Check your account summary
Familiarize yourself with the first page of the document. Does the account balance look right? Are you on track to pay at least the minimum payment — if not the entire balance — by the due date?
3. Review transaction details
Look at each transaction. Although it might sound tedious, it usually doesn’t take long. Plus, it’s a great way to familiarize yourself with your spending.
4. Check for errors and discrepancies
Make sure every transaction is accurate. Look for suspiciously high amounts, duplicate transactions, or vendors you haven’t purchased from. If anything looks off, report it to your credit card company immediately.
Credit card statement frequency
Credit card statements are released monthly — typically around the same date. The length of each statement period may vary slightly based on how many days are in the month and whether there were any federal holidays. TLDR; You can expect credit card statements to be released approximately every 30 days — depending on your provider.
Responsible credit card use means building good credit
In the world of adulting, good credit is essential. It means better home and car loan terms, higher borrowing power, and better financial health. Responsible credit card use is one of the many ways to build good credit.
Plus, reviewing credit card statements gives you an idea of how and how much you spend. And you know what they say…knowledge is power. When it comes to finances, we couldn’t agree more! Learn more about credit education. You’ll find resources for getting a credit card, building credit, and so much more.
