How to Read Your Credit Card Statement

You open your credit card statement, skim down to the amount due, and toss the rest aside. But if that’s all you look at, you’re missing some pretty important numbers—like how much you’re paying in interest and fees.

What Does the Account Changes Section Tell Me?

The account changes section lets you know about important changes to your credit card terms, like an increase in your APR. In many cases, your credit card company has to give you 45 days’ notice before increasing your APR or making certain other significant changes to your account terms.¹

But that doesn't mean every rate increase comes with 45 days’ warning. There are exceptions—for example, a variable APR can go up or down automatically as market interest rates change.

So if you get a notice that your rate or other account terms are changing, don't toss it aside. Read it closely so you know what's changing, when it takes effect, and what it could cost you.

What Will I See in the Transactions Section?

The transactions section shows the purchases, payments and credits that hit your account during the billing cycle. Depending on your statement, you'll usually see details like the transaction date, post date, description and amount for each one.

This is one section you definitely don't want to skim. Look through the transactions every month and make sure you recognize every purchase and that the amounts are correct. If something looks off, don't ignore it.

If there are other users on a particular account, like a spouse or dependent, this section will tell you which user made which transaction on the account. Note: All transactions should be listed in the order they were made, from oldest to newest.

How Much Am I Paying in Interest and Fees?

Your statement also includes a section that shows exactly how much your credit card company charged you in interest and fees during the billing cycle. That's real money leaving your pocket without buying you a single thing.

That's right—using borrowed money can cost you money! This section literally shows you how much money they're taking out of your pocket. And it's all the way down on your credit card statement for a reason. They don't want you to find it. Nope, that's not a smudge or a shadow. That's just the fees they're trying to hide from you.

Like we've said before, the longer you carry a balance, the more interest and fees can build up. At this point, we're guessing your blood pressure is starting to rise—and with good reason. Seeing those charges in actual dollars can be a pretty powerful reminder of why getting out of credit card debt matters.

What Do the Year-to-Date Totals Show Me?

The year-to-date totals show how much you've paid in interest and fees so far that year. It's one of the clearest ways to see what carrying credit card debt has actually cost you over time.

When it comes to annual calculations, there shouldn't be many surprises—although this is another opportunity to see just how much money you've been paying back over the course of the year. Fair warning: If you look closely enough at this number, you might get so angry that you decide to use the debt snowball to pay off the entire thing.

How Is My Interest Charge Calculated?

The interest charge calculation section shows the APR and other information your card company used to calculate the interest you were charged. If you have different types of balances—like purchases, cash advances or balance transfers—you may see them listed separately because they can have different APRs.

This is where you'll get an up-close-and-personal look at just how much you've been dinged by unnecessary interest rates throughout the course of the year.

It might seem small at first, but imagine what happens when people don't bother to look and that number gets bigger and bigger and bigger. Pretty soon, it becomes easy to see how 54% of Americans say they're living paycheck to paycheck.

Credit card statements vary depending on the lender, and unfortunately, we don't have time to dig in to each one here. Just know that sometimes you'll also see other sections like rewards or cash-back bonuses, credit counseling notices, payment coupons and more.

But instead of dreading that credit card statement landing in your mailbox (or your inbox) each month and sifting through a mess of financial terms, make a plan to stop relying on credit cards altogether.

How Do I Use My Statement to Get Out of Debt?

Use your credit card statement as motivation to start the debt snowball and pay off those balances for good.

Start by looking at how much you've paid in interest and fees. Those numbers show you in real dollars what carrying credit card debt is costing you. Let that make you mad enough to do something about it.

And don't stop there. Look back at a few months of statements to see where your money has actually been going. Shannon, a member of THE Ramsey Baby Steps Community Facebook group, recommends doing exactly that: “I would say print out 3 months and look at what you are spending where. Almost anyone can squeeze more money out of their budget if they are willing to make the necessary sacrifices.”

Then put that money to work. List every credit card you have from smallest balance to largest, pay minimums on all of them except the smallest, and throw every extra dollar you can find at that one. When it's gone, roll that payment onto the next card until every last balance is gone.

To speed up the process, you need a plan for the money coming in too. EveryDollar helps you build a budget, take control of your spending, free up more money for your debt, and make sure you’re not adding to those balances along the way.