How Well Do I Know My Credit Statement?
InCharge Institute of America, Inc.
Your credit card statement is more than just a bill.
It's an important document that can make or break your
credit standing. While it's easy to ignore the
information contained within it, taking a few minutes with
your credit card statement will help you stay on top of
your debt. Understanding and monitoring the following five
items on your credit card statements can help control your
use of credit.
Credit Card Balance
Knowing your full balance due at all times will help you
determine whether or not you can pay it off within the
grace period and, if not, how long you can expect to take
to pay your debts. Not knowing your balance can leave you
susceptible to such problems as exceeding your credit
limit, incurring additional fees, and paying more
interest.
Credit Limit
Knowing your credit limit will help keep you out of credit
trouble. If you are about to make a charge and are unsure
of your total balance and credit limit, you may end up
exceeding your limit. This may cause some embarrassment if
your card is denied, and it may cost you some extra
dollars in the form of over-the-limit fees if the charge
does go through.
APR (annual percentage rate)
Your credit card's APR indicates how much interest you
will have to pay on the balance that you owe. The higher
the APR, the more interest you will have to pay. Always
make sure you know the APR on your credit cards. Keep in
mind that some cards' interest rates will vary on
purchases and cash advances. Additionally, be aware that
some credit card contracts contain a clause that allows
for significantly raised interest rates if a payment is
missed.
Grace Period
The length of time that new purchases are free from
interest, called the grace period, has steadily decreased
from 31 to about 23 days. What many consumers fail to
realize is that, in most cases, no grace period is
permitted if you use your credit while carrying a balance.
The trick is to be disciplined enough to pay off the
balance in full within the grace period as often as you
can to avoid costly interest. And when you can't, do
your best to make payments higher than the minimum monthly
payment so you can minimize the amount of interest paid
and make some headway in paying off the principal.
Due Date
The due date on your credit card statement is not
something to forget. Missing your due date-even just by a
day-will likely result in late fees. Late or
over-the-limit fees currently average $18 or more per
occurrence. Try to send your credit card payment at least
one week prior to the due date so you don't get stuck
having to pay any extra fees and interest.
