Nowadays, the financial system is so present in our lives that everyone needs some kind of service at least once in their life, whether for an emergency or for an investment that they couldn't pass up.
You've probably had to open a bank account, buy insurance, apply for a credit card or buy a house with a mortgage. It's hard to find someone these days who hasn't used any of these options, as they're so easy to do and there are so many options available.
Like all services, there are those who make the most of it and those who are easily lost. To be a person who uses credits responsibly, you should learn what a bank statement is and review each of the information numbers contained therein, and it is recommended that you also compare it with the bank statement from the previous month.
Why pay attention?
If you don't pay attention to this or don't take the time to understand each of the details that make up these reports, you run the risk of getting into debt, forgetting payment dates or not taking advantage of services that they can offer and thus avoid the possibility of receiving commissions for late payments or interest on arrears.
However, accounting statements, as you well know, are full of terms, numbers and percentages that tend to seem strange and you may not be aware of some that, in fact, do not present much difficulty for you to understand properly.
Although each financial institution may have its own formats and even some unique terms on the account statement, in general, most of the items published there are common to all and you should be aware of them. Check your account number and card number that appear at the top of the account statement, it is also important to confirm that your name and other personal information, such as your address, are correct. Below, we will analyze more details of the elements contained in the account statements.
What is an account statement and what are its components?
When you open a bank account or take out a loan, you will receive bank statements. People open them and only look at the amount due, ignoring all the other essential information. Checking all the fields can be the difference between paying the right amount or paying more.
If you are one of those people who pay the minimum without looking at the details or other fields, you may be paying fees that are automatically generated as insurance or you may be paying for purchases that you did not make and that someone made with malicious use of your card.
Essentially, your account statement shows a summary of your activity and the movements your account has had over the last period of time. This is usually a month. Here are the fields you should review carefully:
Minimum payment
This is the amount required by the bank to keep your credit current. This is the lowest amount required by the financial institution to keep your credit account up to date without the Credit Protection Service (SPC) receiving a notice of default. Keep in mind that if you only make this payment, it could take a long time to pay off your debt.
Payment to avoid generating interest
It means paying off the debt in full, so that the bank does not incur interest. This is the amount that must be paid at the end of the cycle. Some customers prefer to pay off their debts in full at the end of the month or on the date that corresponds to them, and therefore do not generate any type of interest.
Cut-off/closing date
Indicates the last day that was included in the period's transaction record. This is when your invoice closes. Remember that to take advantage of the 50 days of credit you need to know the deadline and make your purchases only one day after this date.
Payment date
This is the deadline you have to pay your debt, or at least the minimum payment for the month. This is the date on which you must pay back the credit received. Remember that after the deadline the financial institution gives you 20 days to pay.
Current balance and cutoff
Current balance: this is the amount you owe the bank
Balance at cut-off: is the sum of all transactions you made with your credit card on the cut-off date