Do You Understand Your Credit Card Bill?
Your monthly cedit card statement contains many items which few people take the time to review properly. I used to get it every month, quickly scan it, look at the list of new charges, and then glare at the new total and toss it on the bills to be paid pile. I would assume most cardholders do the same thing.
After studying ways to save money, one of them is the proper use of a credit card. Getting a thorough understanding of the monthly statement makes one aware of any potential problems. It is your credit card bill and you are completely responsible for it. Below is a list of the accounting items found on a monthly statement.
Account Number: identification number of your credit card.
New Balance: What you currently owe - past balance minus your last payment plus any new purchases and of course interest and fees (if any).
Payment Due Date: The credit card company must receive your payment by this date. To avoid late fees and a bad mark on your credit record, payment must be received before or on this date. A good habit to get into is to mail out your payment right after your statement arrives.
Minimum Payment Due: This amount is calculated by each credit card company. To find out the formula call customer service and they should be able to explain this to you. In any case this is the absolute minimum you should ever pay. It is prudent to pay much more than the minimum to avoid paying too much interest in the long run. Financial advisors say to pay the minimum two or more times a month this will definitely reduce your credit card debt in a quick an economically efficient manner.
Amount Enclosed: This item is followed by an empty box or line for you to fill in the amount you will be writing on your check. If you are sending more than one check (one for balance transfer) this clarifies what should you intend to pay on the bill.
Make Check Payable to: Make the check out to whatever this name is.
Payment Address: The address to mail the check and bill to.
Address Change: if you notice an error in your mailing address correct it here or if you intend to move to a new address by the next month's statement fill it in here.
Customer Service: Contact info for the credit card customer service. If you have any serious problem with the charges, call the number listed then follow up by mail.
Total Credit Line: The total amount of money you may borrow from your credit card. The amount may be different for cash advances - this depends on the credit card company.
Closing Date: This is the date when the billing cycle closed. Any charges after that date will be placed on the next monthly statement. Closing dates may be different in the next month.
Transaction Date: Date at which you used the card.
Posting Date: The date at which a transaction you made was posted to your account.
Reference Number: This is a tracking number used between the bank and a merchant.
Description of Transaction: Abbreviation or short description of transaction or the type or transaction it was.
Charges: Dollar amount for each transaction made with the credit card. Finance charges and fees might be listed in this column too.
Credits: Amounts that are credited to your account; items purchased and returned to the merchant. In some cases the credit will be listed with a (-) minus sign.
Airline Rebate Summary: If your are earning benefits such as points toward purchases, the current status will be listed here.
Previous Balance: This the balance that was posted to your last statement as 'New Balance'.
Payments and Credits: Any payments and credits that were posted to your account since the last billing statement and before the present closing date.
Purchases: Any purchases between the last closing date and the present one.
Cash Advances: Any cash advances between the last closing date and the current one.
Finance Charges: Finance charges as applied to your previous balance and any new cash advances. Finance charges represent fees for using the credit card such as interest, late payment fees, and cash advances.
Category: gives you a listing of different interest rates on cash advances, purchases or balance transfers.
Daily Periodic Rate: Different daily interest rates for the categories listed. These rates are determined by taking the annual interest rate and dividing by the number of days in the year.
Annual Percantege Rate: Different annual percentage rates for the categories listed. Cash advances usually have the highest rates.
Balance Subject to Finance Charges: The exact dollar amount that is applied to each interest rate.
Number of Days in Billing Cycle: The grace period. This shows the number of days you have to pay off the balance to not have interest charges applied to it on the next statement.
See Reverse Side for Additional Information: Credit card company provides certain information which is required by law. If you have a question this is a good place to start to find an answer.