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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.