Credit card statements used to just give you basic information. As long as it listed what you bought and how much you owe, the rest was really only understood by the credit card company. This has changed and now you know what's going on, too.
Credit card statements changed under requirements by the Federal Reserve Board as of December 18, 2008. These new changes will allow you to be more in control of your fate when it comes to credit card debt. Before the changes, you were lucky to know about your past purchases, the due date and the amount. For anything else, you'd be on the phone with customer service or looking through the statement with a magnifying glass at the fine print.
Change 1: Account Summary
The account summary has the basic information of what your card is about. You'll get an overview of what your transactions are, any fees that you had incurred, and interest charges. You'll see what your interest rate actually is as well as your credit limit. It's important to check the credit limit to ensure it hasn't gone up. Credit card companies are able to raise limits without notifying you. What this also means is that a larger credit limit than you want could end up hurting your overall credit score.
Change 2: Late Payment
Credit cards know that it's possible for you to get sidetracked and forget to make a payment. They also know that some people intentionally don't pay due to lack of funds. This warning will let you make a better decision on making a payment on time or not by telling you what the fees are and a penalty interest rate that could take effect should you miss the deadline to pay.
Change 3: Minimum Payment
Credit card statements will tell you not only what your minimum payment is, but it will also give you more detailed information. This means that it will tell you how long it will take and to what expense (calculating interest) to pay off the debt paying only the minimum. It will then show you what it would take to pay off the balance in three years. The ultimate goal is to help people pay off their debt rather than letting it accumulate year after year.
Change 4: Interest Rates
The statement will show if there are any changes to interest rates. Typically, you'll be given a 45-day notice before the interest rate goes up. Knowing when the rate is going to go up will give you the opportunity to get the balance down before the higher rate takes effect.
Change 5: Fees and Interest
This is an opportunity to be able to see all fees and interest charges that you incurred during the billing period. So instead of just seeing $50, you'd be able to see that it is really a $15 late charge, a $20 foreign transaction fee and $15 in interest rate charges. By being able to identify all of these individually, you'll be able to see what's hitting your statement as well as dispute charges if needed.
Change 6: Year to Date
Fees and interest charges will be shown year to date. These are charges that are in addition to your original purchase. By seeing the breakdown of what you've spent for the year in fees and charges, you'll be able to reduce debt because of a better knowledge. So if you've spent $1000 on product, you'll also be able to see what it really cost you. You can also consider a balance transfer to a lower interest rate card.
Change 7: Summary of Finance Charges
You'll be able to see a breakdown of what all the interest rate charges were based on the kind of transaction. There are purchases, balance transfers, and cash advances â€“ each often come with their own interest rate. The Card Act requires that issuers take anything made above the minimum payment towards the higher rate balance, but the minimum will usually go towards the lowest interest rate.
Understanding everything within the credit card statement will allow you to take control of your debt and pay off the balances at the rate which you are comfortable with and can afford.
The changes to your credit card statement will help you to understand more about debt, making the right choices in paying above the minimum and overall assisting. Each change will help with another aspect of reducing your overall debt over time.