Reading a credit card statement

0:00- [Instructor] What we're gonna do in this video is make sure we understand everything that is told to us in a credit card statement. So over here I have what is hopefully clearly a fake credit card statement, but it has all the information that you will likely see on a real credit card statement.

0:16So first of all, the statement will have a statement date. This is the date that they essentially generated it. You'll probably get, if you're getting it electronically, you'll probably get it this day. If they're mailing it to you physically, it might take a few days for you to get there.

0:30Your account number name. They intentionally X this part out, so that if someone's digging through your trash, they don't know your credit card number. And then this is the billing cycle. It's usually the previous month. Now this is other information, credit limit.

0:44This is how much in total that you could put on your credit card essentially that you can borrow from the credit card company. Available is essentially what you haven't used yet. So this person has already 500, and actually we'll see this, a little over $560 they're using up.

1:02Rewards points, some credit cards, when you use it, you might get more miles of rewards points, etcetera, etcetera. Cash back. And this is actually the other thing that they're telling us right over there, but let's go into what actually happened this past month.

1:16So this previous balance piece, this is what we owed going into that past month. So as we go into the February 15th, now they received our last payment of $80. So that would've reduced the previous balance. But also, over the past month, between February 15th and March 14th, we used the credit card to buy $214.60 more stuff.

1:41So they're going to add that to our balance. So previous balance minus what we paid off, plus now our new purchases. And they're charging us interest. They're charging interest on the stuff that we have, we're essentially just rolling over to the next month. That money continues to get borrowed.

1:59And so in total, our new balance is now $561. So even though we paid some down, we actually had interest and we used the credit card more. So our balance actually increased. Now we see two things right over here. We see a minimum payment due. Well, we see the new balance, minimum payment due and the payment to due date.

2:19So this is really important to think about. So you should definitely, at minimum, pay the minimum due, the minimum payment due. If you don't do that, there's all sorts of bad things that it's going to trigger. They have this late payment warning right over here.

2:35If we don't receive your minimum payment by the date listed above, you have to pay a late fee up to $40. And essentially your interest is going to increase. You're gonna have a penalty APR. That's not good. Your interest is going to increase on everything. So you want to definitely pay off this $30.

2:51But ideally, you want to pay off more in the real ideal circumstances, because usually credit card debt is the highest interest debt that you have. You try to pay this down. That's what I always try to do. I might use a credit card for convenience and maybe to get some of the rewards points, but I try to pay the balance, so I don't incur whatever the high interest rate is.

3:11But they make this clear with this minimum payment warning, that if I pay only the minimum payment, then, and not not taking on any additional charges, then it's going to take 20 months and I'm gonna pay this much extra in total, which is essentially going to be interest.

3:29Or if I pay a little bit more, it's going to take me seven months less and I'm gonna pay less interest. And obviously if I paid even more each month, then these numbers are going to look even better. So it can be very seductive to say, oh, $35, that's all I have to cover.

3:43But you might end up paying for a very long time, especially if you are increasing, if you have additional charges. Now after that, it is good to look at the actual account activity to make sure this is all stuff that you have done. You might wanna look for fraud here.

3:58If you look through this and you say, wait, Riverton Grocery? I don't live in Riverton. Who is charging this? I never went to Riverton Grocery. I never went to Riverton Outdoor Supply. Maybe this is fraud. And that's something you should report ASAP to the credit card company.

4:15Or you might say, no, no, I know Riverton. You know, that's where I live. I definitely did that. So make sure that these are charges that you are familiar with. Sometimes something looks a little unfamiliar, you dig into it a little bit. Oh yeah, yeah, that's when I went to that coffee shop that might look a little bit strange on this, but when in doubt, contact the credit card company because it could very well be fraud.

4:34It's definitely happened to me where we looked at something like, hey, what is that? Or sometimes there's some recurring bill. I subscribe to something that I don't use anymore and it's showing up on my credit card and I say, oh wow, let me cancel that right now.

4:47That's an extra $10 a month. I shouldn't be paying. And then last but not least, there might have some information about how the interest was actually calculated. And once again, this is a fairly high interest rate. The more that you can pay down this balance, the better, so that you don't have to pay this high interest rate.