Understanding your credit card statement is one of the most important things that you can do as a consumer. A credit card statement is essentially a document that your card provider provides each and every month detailing your transactions for the past billing year, and any other information that they feel comfortable sharing. If you have had a card for several years, you may find that your account details are not as transparent as you would like them to be. Your statements may include inaccurate information, which will negatively affect your credit score, making it harder to obtain new lines of credit or affordable loans in the future.
Understanding your statement is easier if you understand how it is issued. Credit card providers issue statements containing all the relevant information on the account summary and transaction history. The account summary tells you the name of the card holder, the account balance, the date that the transaction was made, the amount of the purchase, and the name of the merchant or company who made the purchase.
The account summary also includes the balance of each charge, any applicable fees, and any other special charges, if applicable. The statement, however, does not detail which charges were made, where the purchases took place, or when the account was opened. All these details must be provided by the merchant or company providing your credit card statement. This section alone may contain hundreds of different transactions and documents, and can often confuse even the most seasoned consumers.
Another detail that may be unclear in your credit card statement are your payments. For example, many companies will provide a statement with the amount of your payment due, the date of your payment due, the minimum monthly payment due, the interest rate that apply to your loan balance, and the percentage rate that apply to your balance transfer or purchase. While it may seem like an easy feature to overlook, understanding your payment due date can impact the interest rate that applies.
The account summary also includes a section that discusses your credit line. Many statements do not mention the APR and instead only briefly discuss the finance charges listed in the statement. If you have a zero percent introductory rate on a credit card, for example, you would not see it in the statement, because the interest rate is typically low when compared with the standard interest rate. However, if you make purchases with a credit line higher than the available credit line, your finance charges will likely be higher than the rate of the APR, and this can add up to a large amount of additional finance charges.
Finally, understanding your credit card statement balance can be helpful when you make a claim for credit repair. If you have a good understanding of your finance charges, you can accurately calculate the amount of your monthly credit limit. Furthermore, you should be able to determine the percentage of your credit limit that is actually used each month, which can help you reduce, or eliminate, your finance charges. Understanding your credit card balance can also be useful when you are making any type of purchase, since a good understanding of your available credit limit can help you determine the appropriate amount that you need to purchase each month.
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