How to read a credit card statement and dispute charges.

(1) Type of Balance: Numbers to the right of "Purchases" refer to goods purchased. Numbers to the right of "Cash Adv" refer to cash advances (none on this statement example).

(2) Previous Balance: This shows the amount due on the previous month billing. Here is was $1,241.28.

(3) Average Daily Balance: Daily average used to compute finance charges. Not all banks use a Daily Average to compute interest.

(4) Percentage Rates: The interest on amounts not paid before the due date (#9). The Monthly Periodic Rate is simply the Annual Rate divided by twelve. In this example the bank charges the same 16.8% interest on purchases as it does on Cash Advances. Some banks charge more for Cash Advances.

(5) Charges: Amount charged to card in past month. New charges.

(6) Payments: Amount paid during the month. On this example $1,231.28 was paid. Note that the previous balance was $1,241.28 so the bill was not paid in full. A balance of $10 is still owed.

(7) Finance Charges: Because payments (#6) were $10 less than the previous balance (#2), finance charges apply to ALL the new charges (#8) of $1,454.95. The Finance Charge for the month is $21.26. It was computed by multiplying the monthly rate (1.4%) by the average daily balance shown in (#3).

(8) New Balance: The sum of (#5) and (#7). This is the amount that should be paid by the payment due date (#9) to avoid further finance charges.

(9) Payment: Pay by this date to avoid finance charges. The Grace Period in this example is 25 days.

(10) Account Number:  Do not give the number out except to make a purchase.

(11) Credit Limit: How much the bank will let you charge.

(12) Transaction Date: The date an item was purchased or a payment received by the bank.

(13) Posting Date: The date the bank received the charge slip from the merchant. Usually only a few days after the Transaction Date.

(14) Reference Number: Unique number applied to each purchase or payment.

Credit Card Tips

Credit card companies are taking all the steps to make sure they will be ready for the new laws in February 2010. Some companies are ready and others are getting more prepared. Disclosing the terms and conditions in an easy to understand way is part of the new law. 

The companies usually offer consumers a card that fits their credit type even if it was not the card inquired about. When consumers are offered different cards, they will also get information about the terms and conditions associated with the card offer before the application is processed.

Cards have different APR information and will state if the APR will apply to cash advances and what can cause it to rise or fall. Some companies increase the rate when payments are late or the credit limit has been exceeded. Information about processing fees will be provided and may vary depending on credit worthiness.

Secured credit cards as other credit cards have different fees, terms, and conditions. Processing fees can range from $0 to $35. Every company is different and may require low security deposits or high deposits. They can change the APR and can apply payments to lower APR balances before applying it to higher balances. When seeking a credit card, it is important to read all the terms and conditions for fees. For example, if you select that you want your credit card delivered quickly, it could cost you.

Make sure you know who your credit card issuer is, their phone number, how they process your personal information, and if they share your personal information with third parties. keep all your credit card account numbers in a safe place along with phone numbers in case you ever need to report a lost or stolen card. Always report lost cards immediately. Having a credit card is a privilege and the terms and conditions for using the credit card must be followed.

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