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

During the year there are several holiday seasons during which credit cards are used more often to charge gifts, do extra shopping, to prepare meals, or help prepare festivities for family and friends. Lists are made, groceries and gifts are purchased, and all of this makes for fun activities and making holidays special. The great thing about using credit cards during all the rush of shopping and purchasing special items, is that when the statement arrives it is easy to see where all the spending took place. Those same statements can help make returning purchases easier and faster in the event the receipt was lost. The item can be matched to the transaction numbers on the statement and the credit card can be credited with the return. It does not get much better than that.

Using a credit card when there is not any extra paycheck, has helped fund many special occasions for people who have been unsuccessful in getting approved for personal loans. When charging is kept within reason, just like only borrowing money, it is not a problem later. There is always credit card abuse and taking out too many loans that can be repaid back by some people. Those people who try to be financially responsible and repay their debts, use credit cards and fast cash loans as financial tools.

Holiday seasons do not have to land people into debt from overspending, when the spending is planned and limited. Getting into debt can happen not only during special occasions but can happen throughout the year. People every day damage their credit due to over spending, without it being a holiday. Holidays, for some people, may encourage a spirit of giving, which may lead to exhausting the monthly income. Credit cards can help for those times when gifts need to be purchased or bills need to be paid before the next paycheck arrives. It is about setting limits and making some wise choices.

To eliminate the need for cards and loans, having a savings account can be helpful. Some consumers are good about having an emergency fund for those periods when extra spending is needed. Yet many people never have a savings account. It is surprising the people who do not even use a checking account. Since there are options to apply for prepaid or debit cards, regular unsecured cards are not the only choice to be able to use plastic for spending. Using a piece of plastic can be rewarding without getting into debt. Prepaid cards are often advertised as guaranteed approval cards. The wonderful thing is that a credit card balance will not be due when the statement arrives. If money is not loaded onto the card, the card can not be used for purchases. The cardholder can only spend what they have funded on the card.

Many of these cards require only small deposits and a monthly or yearly fee. The important thing to remember is that if the card has not been funded, it can not be used. These cards can have online statement features to track spending, online account management, and easy ways to preload the card as needed. The great thing is that if it is lost or stolen, the money is not gone forever like cash that is lost. However, the card should be reported lost or stolen as soon as possible.

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