What Is a Billing Statement? Definition, Key Details, How To Read

What Is a Billing Statement?

A billing statement is a monthly report that credit card companies issue to customers, showing their recent transactions, minimum payment due, and other relevant information. Billing statements are typically issued at the end of each monthly billing cycle and can be received by mail or online.

Key Takeaways

• Billing statements show credit card users how much they owe, their minimum monthly payment, and when it is due.
• Billing statements list any transactions since the previous statement.
• Billing statements also show the interest charged on the account that month, along with any other fees.

How Billing Statements Work

Credit card billing statements are subject to federal and state laws.

For example, the statement must be delivered at least 21 days before the payment due date. If the minimum monthly payment is made within that time frame, it cannot be counted as late.

The statement must also provide a warning that making only the minimum payment will result in more interest and a longer payoff time. That information is presented in a table, showing the potential savings in time and money of paying more than the minimum.

What’s in a Monthly Billing Statement?

Billing statements follow standardized formats and can run for one or more pages. They’re usually divided into discrete sections.

Pertinent information such as the total balance, minimum payment due, and payment deadline appears near the top.

An account summary shows the previous balance, recent payments and credits, new purchases, balance transfers or cash advances, fees and interest charged, and the new total balance.

Interest rates for different types of transactions may be provided in a separate section.

The statement lists all transactions since the previous statement, including date, payee name, address, and amount charged.

The statement includes customer service contact information, along with information about the cardholder’s rights.

For mail payments, a tear-off slip may be included.

The statement may also show rewards earned since the last statement and the current rewards balance.

How Long Should You Keep Your Billing Statements for Tax Purposes?

If billing statements contain information relevant to taxes, they should usually be kept for at least three years.

Items that might be relevant for tax purposes include medical expenses, charitable donations, real estate and other taxes, and business expenses.

How Do Chargebacks Work?

A chargeback allows you to withhold payment for unsatisfactory goods or services. If a complaint to the merchant fails, you can ask your credit card issuer to reverse the charge. Requirements include a purchase of at least $50 and it must have been made in your home state or within 100 miles of your home address.

What Is a Balance Transfer?

A balance transfer involves moving the current balance from an existing credit card to a new one. The new card may offer a lower interest rate or even charge 0% interest for a promotional period. Fees and higher interest rates may apply to balance transfers.

What Is a Cash Advance on a Credit Card?

In addition to purchases, you can obtain cash from a credit card through a cash advance. Cash advances can be expensive, incurring fees and a higher interest rate than purchases. They generally have no grace period and start accruing interest immediately.

The Bottom Line

Your credit card billing statement provides information beyond how much you owe. Reviewing it each month can help identify errors and understand the true cost of your card. It can also serve as a budgeting tool, recording expenses that might be easily forgotten.