Why it's really worth checking over your credit card statements

Opinion: Review bills for accuracy and to spot potentially costly spending habits. Balance and payment info isn’t enough to keep debt under control.

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Q: I’m recently separated from my spouse of 32 years and we are working through separating our finances. We have a mostly amicable separation and as we figure out how to untangle everything, I’ve noticed that it’s been a long time since I’ve managed money on my own. Setting up a new, second home is also costing a lot more than I thought it would. Keeping track of my spending isn’t really the issue – it’s credit card bills. They seem to get out of hand so fast! It’s gotten to the point where I just pay them without even looking them over very carefully. What can I do to keep better track of my credit card bills? ~Lily 

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A: At some point, almost everyone who has a credit card, has experienced ‘balance shock.’ It’s the feeling we get when we look at our statement in disbelief, thinking how we could have spent as much as we did, or how all those small transactions could have added up to so much. During times of change in our lives, our credit cards can be the lifeline we need to get by. But at the same time, they can also quickly become an anchor that weighs us down and adds to an already stressful situation.

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To stay on top of your finances, it’s important to quickly inventory all of your bills, not just credit card statements, at least monthly. Then aim to do a more thorough review no later than every second or third month. Here’s why, and how it will help you manage money better.

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Why is it important to check over credit card bills?

Do you check your credit card balance each month or every time you want to make a bigger purchase? Verifying how much you owe – and by extension, how much available credit you have – is not the same as reviewing your statement.

Going over your credit card statements serves several purposes. It checks for accuracy with purchases as well as credits, serves as notice if the lender is updating any terms or conditions, and shines a light on your spending habits. Simply verifying only your balance is not the same as reviewing your statement.

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How often should you check your statements?

Get into the habit of checking your credit statements at least once a month. Review each transaction to make sure they are all yours and that extra charges or fees haven’t been added. If there are transactions there that you don’t recognize, verify with any supplemental cardholders if they made a purchase you aren’t aware of. When charges really don’t look familiar, contact your credit card company and ask if they can give you more information about that particular merchant.

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It could be as simple as identifying the merchant’s public business name for you, which could be very different from the business name or number listed on your statement. If you really don’t recognize the charge, let your credit card company know that it may be fraudulent. The fraud department will investigate and let you know more. In the meantime, most cardholder agreements stipulate that you need to pay the full amount owing on your statement to avoid any interest charges. If this poses a hardship and the credit card charge is suspected fraud, ask what your credit card company can do to help you while they do their investigation.

While reviewing your credit card statement, also ensure that nothing is missing. If you made a series of payments during that billing cycle, check that each one has been applied. When returning a product to a retailer or obtaining a refund for a service, the credit to your credit card account can take a few business days to complete. Watch that each refund is credited back correctly and that none were missed. It can help to turn on mobile transaction alerts, if you use a banking or credit card app on your smartphone that allows alerts, so that you’re notified each time a credit or charge is processed through your account.

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How to Stop Relying on Your Credit Card to Make Ends Meet 

Stop ‘runaway’ credit card spending to get debt under control

Part of getting credit card spending under control is stopping ‘runaway’ charges on your cards. It could be the monthly charge for a trial subscription that you didn’t cancel before the promotional period ended. Maybe it’s a subscription that you still use, but what you’re being charged doesn’t align with your usage. If you have children who are too young to have their own credit cards, you may have signed up for a service they needed but no longer utilize. Subscription cost are silent spenders that can needlessly add hundreds of dollars extra to what you owe on your credit cards.

Silent Spenders – How to Stop the Damage 

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On top of ‘runaway’ spending, credit card balance protector insurance, over limit and cash advance fees, and interest will also silently and steadily increase what you owe. Fight back by reviewing the terms and conditions of the insurance and evaluate its value to you in light of other insurance you may have. Cancel the insurance if it’s too restrictive or if you have enough coverage through work or elsewhere.

Be aware of the fees and interest you incur depending on how you use your credit cards. Missing a minimum payment can add as much as 5 percent to the interest rate you’re already being charged, and if you exceed your limit, there’s usually a fee for that too. Avoid expensive cash withdrawals from your credit card because they come with additional fees, a higher interest rate, and no interest-free grace period. Carrying a balance from month to month can also add as much as 50 percent to everything you buy by the time you’ve paid it off.

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If Your Credit Card Could Talk, What Would It Say? 

Look beyond your minimum payment

Credit card statements in Canada must include information about how long it will take to pay off what you owe if you only make minimum payments. It’s often one of the last things noted on your bill, but it can be a sobering disclosure because minimum payments aren’t designed to help you pay off what you owe. They simply allow you to maintain your contractual agreement with your credit card companies. Work to bring down what you owe on your credit cards so that you’re in a position to pay them off every month. By not carrying over any balances the cards can be free to use.

4 Minimum Payment Myths – Avoid These Pitfalls 

The bottom line on using credit cards wisely

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While it’s easy to blame our credit cards for our debt, they are just shiny pieces of plastic. Take steps to break your reliance on this high interest convenience by planning your spending and ensuring that your bills are paid in full every month. Credit card debt in Canada is at an all-time high, so resist normalizing debt. Be conscious about your spending and make decisions in line with your goals and priorities to ensure your long-term financial wellbeing.

Related reading: 

12 Tips to Use a Credit Card But Not End Up in Debt 

3 Secrets to Paying Off Credit Cards Fast 

What Happens If You Stop Paying Your Credit Card? 

Peta Wales is President and CEO of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Peta by email, check nomoredebts.org or call 1-888-527-8999.  

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