Reading a credit card statement is probably the best way to stay informed about your financial health. A statement of credit card accounts shows you exactly how your credit card company spends your money, showing you everything that you've been charged and exactly how much they have charged you in the past 12 months. The statement will also show you any late payments or balance payments. This makes it easy to find out which areas of your spending need to be cut back or redirected to help you start living within your means.
What else can you do with a credit card statement? One of the things that most companies will ask for is an itemized list of all your charge cards, so that you can see which ones are paying off and which ones are being charged to the maximum allowable amount. One thing many people overlook when they're tracking their spending is the effect of late payments. Your statement will show you all charge-offs as well as any cash advances that have been made against your account, and you can use this information to determine how much you should be charging for each category on your credit card statement.
For example, let's say you have three credit cards and one is maxed out. If you were to simply pay off the minimum payment on all three cards, you would be completely finished paying down your balance. But if you had made a minimum payment on all three cards and neglected to make a payment due on the last one, you would only have one due date left, and it would be at the maximum amount you can charge. Depending on the amount of interest that you have to pay, you could be looking at several thousand dollars in additional charges! If you have a fairly decent income, this could mean the difference between a good credit card rating and a poor one. In this case, it would be worth it to read your statement balance carefully and see what you can do to resolve the situation.
When you read your credit card statement, it's important to understand what fees you are being charged. For example, if you only have one interest rate, rather than a range of rates, you can use the “charges table” found on the back of your statement to see which fees apply to your account. This may seem like a lot of work, but it's really only about two or three minutes of reading. Then you can make an informed decision on what changes to make to lower your rates.
Finally, once you have your statement in hand you need to know how much the interest charges are on each of the different categories of debt that you have. If you only have one credit card and one payment, you have two interest charges and two payments to make. If you have four credit cards, each with its own payment and two different interest charges, you have twelve interest charges and twelve payments. It can get complicated, but once you've determined the basics it's usually easy to keep track of where you're going. Use the APR table and the APR interest rates section of your statement to determine which of your balances transfer to the lowest rate of interest as well as whether any balance transfers are also available from other cards.
Finally, once you've worked out all your major points it's time to consider your other options. If you've got some low balance transactions, you might want to cancel them. Otherwise, review the terms of the account summary to see if there are any fees associated with your balance transfer. Also look at the rate tables to make sure you are getting the best deal possible. Finally, be sure to look at your payment warning.
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