There’s much more to credit card debt than numbers. Personal finance is made up of your past experiences, your personal choices, and sometimes circumstances that you’d rather not face. Combined, these complex factors can result in an emotional response to your debt that makes even credit card statements a source of anxiety. In fact, it’s fairly common for borrowers to feel so apprehensive about the information that’s inside a credit card statement that they leave it unopened entirely.
Standing up to your numbers can be a scary thing. Even though a credit card statement is just a piece of paper, it also represents a very stark look into your financial circumstances. But while intimidating at times, these statements also give you insight on where you stand with your debt and what changes you can make in order to pay it off even faster.
By leaving statements unopened, you miss out on the opportunity to tap into information that can help you conquer your debt. Opening, studying, and learning from your credit card statement will empower you to take calculated and informed action to get out of debt!
So if you’re in the habit of pushing your credit card statements aside, it’s time to face that fear and get out that letter opener! We’re going to help you decode your credit card statement so you can take back control of your finances. We’ll start with the hardest step first…
Open your statement.
Truly, physically opening a statement can be one of the most emotionally difficult parts of the process. Since it outlines a potentially overwhelming financial reality, many people feel intimidated, frustrated, or defeated by the prospect of opening a credit card statement. So first take a deep breath and take a minute to prepare.
As soon as you open your statement you’ve overcome a huge hurdle in taking control of your finances. When you open your statement, you begin to realize the power that lies in your hands.
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All opened and ready to go?
Once you’ve opened your statement, take a highlighter or a pen and begin to locate and underline the phrases that are confusing to you. We compiled some key information to look for, which will help you decode your credit card statement. But if you’re confused and/or find unfamiliar terms, make sure to set up a call or meeting with your credit card company – and don’t be afraid to ask questions!
These phrases are meant to reflect useful information that’s often included in a credit card statement. Each bank or credit union varies, so we’ll also give additional resources below:
Dates: Some statements are sent quarterly, some monthly. Locate the date(s) on the statement to confirm the timeline you’re evaluating. For the sake of practicing, you can either use your most recent statement or use an older statement for a practice round.
Interest rates: You may already be familiar with your interest rates but it’s never a bad idea to check in. They give you insight into what’s happening with your debt and how much interest will accrue on your principal. Do note – these interest rates are sometimes shockingly difficult to find on a credit card statement! Make sure you’re looking for your current interest rates and not at potential offers inserted by the credit card company.
Bonus: You can use interest rates as a motivator to help you speed up your debt repayment. For credit cards, some interest rates can be as high as 18% which could translate to a lot of interest added to your debt over time!
Interest accrued/charged: This reflects the amount of interest accrued during the billing period. It’s calculated according to your interest rates and your principal balance. If you are under an agreement with a 0% APR for an agreed upon timeline, then you will see no interest charges.
Payments: This number indicates the amount you have paid off to date. It’s kind of like your victory number! When this number matches your original loan – you’ve paid off your debt!
Credit Line: This number tells you the amount of credit available to you. Though it may be a high number you do not need to spend up to this limit on your credit card – in fact, you shouldn’t! It’s just the amount available to you.
New Balance (sometimes principal balance): This is the balance that remains to be paid. Don’t be confused by “new” which only indicates that the number has been updated (lower if you’ve made a payment within the last month, higher if you’ve charged your card in the last month) within the last payment cycle. Ideally, you want this number to be going down each month!
Previous Balance: The balance on your loan at the end of the previous billing cycle.
Next Due Date: The date by which you must pay your next bill. If not paid by this date, you will incur a late fee. This is the date to put in your calendar. It’s also helpful to set an email reminder a few days prior as a way to alert yourself to an upcoming due date.
Minimum Due: This usually corresponds with how much interest has accrued on your account. If you want to pay off debt more quickly you will ideally make payments higher than this number if you can. (Read more about minimum payments here)
Contact Information: Generally found in the top section or at the bottom of a statement, this information includes ways to contact and communicate with your bank or loan servicer. The website, 800 number, and mailing address is usually included. This information is helpful in that it directs you towards the first point of contact for questions or concerns.
Asterisks or symbols: Circle any asterisks or symbols! These symbols are important because they usually indicate a rule, regulation, or exception. You can usually find their corresponding meaning located in a key along the bottom of the paper or at the end of the statement. As you continue to look at statements in upcoming months, continue checking these symbols as they generally relay important information that can change statement to statement.
Fees Charged: Most bank statements will show fees that have been charged to your account. Whether it’s a late fee or a monthly maintenance fee it’s important to know what extra charges you’re paying. To reduce these kinds of expenses, try negotiating these charges down or removing them entirely.
Fine print: Fine print can include a number of things including updated regulations, new rules, or important information regarding upcoming changes. Take time to read and highlight anything that you find confusing!
Not all bank statements share information in exactly the same way and some are much easier to interpret than others. That’s why it’s important to familiarize yourself with the differences between statements at varying financial institutions that you may be a part of. Once you feel comfortable with the core information, you can use the various statements to your benefit. Practical Money Skills and Aie both give examples of generic credit card statements. Many banks or lenders, such as Wells Fargo or CitiBank, give examples of how to read their specific credit card statements.
Don’t let a piece of paper hold power over your emotions. When you open your statements and decode the information you give yourself just another opportunity to take back control over your finances!
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