FINANCIAL BLOG FROM YOUR CHIEF FINANCIAL OFFICER
Title: Understanding Your Credit Card Statements
Would it be safe to say that most individuals over the age of 25 have a credit card? Therefore, understanding your credit card statement is important since not too many people read their statements on a monthly basis or if at all. Understanding how your credit card works is a key factor in using it responsibly.
In this article I will be focusing on the following:
- The account summary
- Statement closing date
- Statement due date
- Minimum payment warning
- Late payment warning
Your credit card issuers are required to send your monthly credit card statements at least 21 days before your minimum payment due date. Included on your statement (usually on the right side) is your Account Summary. The following information is displayed: previous balance, payments & credits, current purchases, balance transfers, cash advance, and interest charged. The account summary gives an overview of your credit card account status. You will also find your current balance, fees, credit available, and the date the billing cycle closed. These are the most important information on the statement.
Your credit card works in monthly cycles. Your credit card Statement Closing Date is the day your credit card billing cycle ends. The closing date is the day in each month that divides your account’s previous billing period from its next one. At this point, the current balance is reported to the credit bureaus. Any purchases, cash advances or balance transfers made after the closing date will go into the next cycle.
Note all your transactions made since the previous closing date and make sure they are all legitimate purchases that you have made. If there are any discrepancies or unknown purchases, contact your credit card company immediately. The statement closing date is also the date your statement is generated, and interest is charged. It is also the start of the countdown toward your payment due date.
Pay close attention to this date! That should be the first date you review. While the closing date is the end of your statement cycle, the Statement Due Date is the date by which you must make your payment to avoid a late charge. Your credit card company will set a date on which you should make your payment. Your credit card payment due date is the date when you should pay down your balance. This date will appear at the top of your statement. If this date is not good for you, you can change your due date by simply calling your credit card provider.
Must know information about statement due date:
a. It is the last day of the month you can pay the minimum payment without facing consequences.
b. You will be charged interest on your revolving balance if it is not paid in full.
c. This ties to the health of your credit score.
d. Paying your bill after this date could damage your credit.
e. The date will be the same each month.
f. Paying your bill on time represents 35% of your FICO score.
The Minimum Payment Warning on your credit card statement. This warning on your statement is a requirement under the CARD Act. The Credit Card Accountability Responsibility and Disclosure Act of 2009 is a federal statute passed by the United States Congress and signed by U.S. President Barack Obama on May 22, 2009. It informs cardholders that making only the minimum payment each month will result in a higher amount of total interest paid and a longer repayment period. It shows consumers the cost of paying the minimum payment only.
The Late Payment Warning on your credit card statement. This warning on your statement is a requirement under the CARD Act. It discloses exactly what the repercussions are for making your payment late (after the due date listed on the statement). It includes the amount of the late fee and the “penalty Annual Percentage Rate (APR)” which is the significantly higher interest rate that could be applied to your current account balance and future transactions. Credit card issuers do not report payments that are less than 30 days late to the credit bureaus. If your payment is 30 or more days late, then the penalties can add up. In most cases, you will be hit with a late payment fee. Do these few things to avoid being hit with a late payment fee: (1) Set up auto pay, (2) Set payment reminders, and (3) Change your payment due date.
By following these few ideas and getting a better understanding of your credit card statement you will be on your way to taking control of your money, so your money does not take control of you. Remember, “when money realizes it is in good hands, it wants to stay and multiply in those hands.”
I believe in you!