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 credit card holders showing their recent transactions, monthly minimum payment due, and other vital information. Billing statements are issued monthly at the end of each billing cycle. For example, credit card holders can receive their billing statements by mail or online.

How a Billing Statement Works

Billing statements are an essential piece of communication, providing a borrower with the minimum monthly payment that they must pay to keep their account current. It also includes other important information such as the transactions that occurred during the month, the total interest charged for the month, and any fees added to the balance by the credit issuer. In addition, it shows the closing statement balance, which can be paid off entirely by the borrower.

What's in a Monthly Billing Statement?

A billing statement is usually divided into several sections. One section contains the cardholder’s previous balance, payments, and credits (how much money they’ve paid toward their balance plus any merchant refunds), the total dollar amount of new purchases made during the billing cycle that just ended, balance transfers, cash advances, fees charged, interest charged, and the new total balance.

A billing statement also provides the borrower with the minimum payment due and the due date to avoid a late fee. Revolving credit accounts provide a borrower with an open line of credit which they can pay down and reuse each month. The minimum monthly payment is generated by the credit issuer each month and allows the borrower to pay down their balance in order to keep their account in good standing and their credit line active.

In another section of the billing statement, the cardholder will find information on their account. This section will show comprehensive account information such as the cardholder’s total credit limit, the amount used, and the amount available. It will also show the amount of a cash advance that is available.

Borrowers with rewards credit cards may also be interested in the benefits section of the billing statement. This section shows the points a cardholder has earned towards rewards.

Account Transactions

A significant portion of a credit card billing statement is utilized for the disclosure of transactions. Typically a credit issuer will provide an itemized summary of interest rates charged by the transaction category at the beginning of the transaction report. The account transactions section will then show each transaction charged during the billing cycle. Transactions typically include detailed information about the charge including the transaction date, post date, merchant name, and transaction amount.

The Bottom Line

Generally, billing statements will also include a payment coupon for consumers who send their payments by mail and information about different ways to contact the credit card issuer with any questions.

The billing statement also provides a cardholder with details on what to do if they notice a mistake on the billing statement, how consumers can make payments, and how the card issuer will handle those payments. The fine print will also explain how the issuer calculates any interest charges.