How to read and understand your credit card statement

If you think your credit card statement is just another piece of junk mail, think again. This monthly document contains important information about your spending habits, financial health, and potential red flags that could cost you big time if ignored. From uncovering fraud to avoiding unnecessary fees, your credit card statement is a powerful tool in your financial toolbox.

What is a credit card statement?

A credit card statement is a monthly snapshot of your account activity. It's like a financial report card, showing everything from purchases and payments to fees and interest charges. But it's more than just a list of transactions — it's a window into your financial habits and a safeguard against errors and fraud.

Why your credit card statement matters

Dawn-Marie Joseph, founder of Estate Planning & Preservation, emphasizes the importance of reviewing your statement: "Watching over your statement will help you keep track of your spending. You might also see you are paying for something twice, like a streaming service, for example."

But it's not just about catching duplicate charges. Your statement can help you:

• Detect fraudulent activity early
• Understand your spending patterns
• Avoid late fees and interest charges
• Maximize your rewards earnings

Let’s get into the key sections of your credit card statement.

How to read your credit card statement

Account summary

What this tells you:

• How your current balance was calculated

This section is your financial snapshot for the month. It includes:

• Your new balance
• Available credit
• Statement closing date
• A summary of transactions (purchases, payments, fees, etc.)

Pro tip: Compare your available credit to your credit limit. If you're consistently close to maxing out your card, it could negatively impact your credit score.

Payment information

What this tells you:

• Your current balance
• Minimum payment amount
• Payment due date
• Minimum payment warning

This section is crucial for staying on top of your payments and avoiding costly fees. Pay special attention to the minimum payment warning — it shows how long it would take to pay off your balance (and how much interest you'd pay) if you only make minimum payments.

Note the payment due date here. Late credit card payments can trigger late fees and a penalty interest rate, which can damage your credit score.

Transactions

What this tells you:

• A detailed list of all account activity within a billing period

This is where you'll find a record of every card swipe. It includes:

• Purchases
• Payments
• Credits
• Cash advances
• Balance transfers

Individual purchases are listed with the amount and date for each, along with amounts and dates for payments made.

Pro tip: Scan this section carefully for any unfamiliar charges. It's your first line of defense against fraud.

Fees and interest charges

What this tells you:

• Interest charges for the current billing period
• Any credit card fees applied to your account

Here's where you'll see the cost of carrying a balance or using certain card features. It breaks down interest charges by transaction type (purchases, cash advances, etc.) and lists any fees you've incurred. These fees may include annual fees, late fees, balance transfer fees, or cash advance fees.

Understanding this section can help you make smarter decisions about how you use your card. For example, if you see high cash advance fees, you might reconsider using your card to get cash at an ATM.

Account notifications

What this tells you:

• Legal disclosures
• Upcoming changes to your card terms

Don't skip this section! It's where your card issuer will notify you of any changes to your interest rates, fees, or other important terms. By law, card issuers must give you at least 45 days' notice for most changes.

Rewards summary

What this tells you:

• Points, miles, or cash back earned during the billing period

This section is gold for rewards enthusiasts. It shows how many rewards you've earned, often broken down by category. Some statements even show your total rewards balance and redemption options. If you earned a credit card sign-up bonus during a billing period, this reward amount will also be listed here.

Pro tip: Use this section to maximize your card's rewards structure. If you're not earning many points, it might be time to reassess your spending or consider a different card.

How long should you keep credit card statements?

Anthony Merola, who oversees Citi’s U.S. branded credit cards and lending business, recommends holding onto statements for at least 60 days. "Holding onto your statements for at least that long should give you enough time to catch any unfamiliar charges," he says.

This advice is based on the Fair Credit Billing Act (FCBA), which gives you up to 60 days to report any errors or dispute any charges with your credit card issuer.

But in the digital age, you might not need to keep paper copies at all. Most issuers provide online access to statements for 12 months or more. This means you don't necessarily have to keep paper statements and can get the information you need on your online account management page.

How often you should check your credit card statements

Both Merola and Joseph agree: review your statement every single month. It’s not just about catching fraud — regular reviews can help you understand your spending patterns and identify areas where you might be overspending.

Set a reminder on your phone or calendar to review your statement as soon as it's available. Many issuers also offer real-time transaction alerts, which can help you spot issues even faster.

What to do if you spot an error

If you see charges you don’t recognize, contact your credit card issuer immediately. You can use the number on the back of your card or check your online account for dispute options. Gather relevant receipts or documentation, and follow up in writing if necessary.

Not only do you want to have these charges removed from your account, but this could be an early sign of identity theft. To add even more security on your end, you can freeze your credit reports to make sure criminals cannot open new accounts in your name.

Frequently asked questions

The bottom line

Your credit card statement is a monthly goldmine of financial information. By taking a few minutes to review it regularly, you can protect yourself from fraud, optimize your spending, and take control of your financial health. You can use this information to improve your financial standing, but only if you take the time to check.