How To Read Your New Credit Card Statement

June 24, 2010 - PRLog -- When Congress passed the CARD Act, one rule that affected all consumers is that credit card lenders must make billing statements clearer. You might already have noticed the differences in your bill. Here is an outline of the changes to credit card statements and what you need to know to pay off your credit card debt.

1.   Pay special attention to account highlights. The "account information" or "account summary" section shows you the most important parts of the bill: How much you owe, when the payment is due, and how much you are paying in interest fees. Circle or highlight the due date. Add the date to your calendar, write a check or enter an online payment as soon as you receive the bill to avoid late fees.

2.   Pay more than the minimum -- and understand why. Bills now include a chart that shows how long it will take you to repay your balance if you pay only the minimum. The chart also shows how much you should pay each month to pay off the balance in three years, and how much you will save in interest by doing so. This chart depicts exactly why it is so important to make more than the minimum payment.

3.   Watch the interest rate. Credit card companies must clearly show the interest rate (also known as the Annual Percentage Rate (APR)), interest being charged in this billing period, and total interest paid for the year to date. Also note that under the CARD Act, lenders must disclose the APR you will pay before you open an account. They also must notify you before they change the interest rate.

4.   Know what happens if you pay late. Statements now must explain the consequences if you pay late. Paying late usually triggers a fee. It also can raise your interest rates for at least six months, and late payments damage your credit score. Another box lists total fees you have paid for the year, including late fees. Pay on time to avoid these fees.

5.   Easily see when to pay. The CARD Act states that credit card lenders must make your bill due the same day each month. They can no longer move the date to trip you up. The due date and time must be listed on the bill where you can easily see it.

6.   You won't see over-limit fees. Under the CARD Act, consumers must opt-in to permit charges over the credit limit (which incurs additional fees). If you don't opt in, any purchases that exceed the limit will be denied, and you won't be responsible for any fees.

7.   Read the whole statement. Don't stop at the top. Always review all account activity carefully. Be sure you recognize every charge on a statement. Identity thieves often begin by making a few small charges to test whether an account is active. If you find a transaction that you don't recognize, address it right away. Some bills include a phone number for the merchant, who may be able to help verify the charge.

8.   Get help with fraud from the credit card company. When a merchant cannot or will not correct a problem transaction, the credit card issuer can help. Under the Fair Credit Billing Act, you must notify the credit card issuer that you are disputing a transaction within 60 days of the error. To protect your legal rights, you must notify the card issuer in writing, not by telephone, with a letter such as a sample dispute letter. (But if you are reporting unauthorized use, calling is acceptable -- and is the fastest way to cut off a thief.) Send your letter via certified mail to obtain proof of delivery. The credit card company is legally required to verify and/or correct the billing error within 90 days of receiving your written notice.

9.   Seek help if you are in over your head. All credit card bills now must include a toll-free number where customers can get information about credit counseling. This is a good reminder to check in: Is your debt manageable? If not, evaluate all debt relief options, including debt consolidation and debt settlement. http://www.freedomdebtrelief.com is a great place to start.

Unfortunately, the new CARD Act won't make it easier to eliminate debt once you have it -- that still takes good, old-fashioned willpower. But at least it is now simpler for consumers to understand what they owe and how to eliminate it. Use these tools to help yourself get -- or stay -- out of debt and avoid the credit card trap.

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