Last Updated: February 7, 2024
1 min read
Using your credit card
Key points about: your current balance vs. statement balance
-
Your statement balance is what you owe for a billing cycle, but your current balance is a running total of your unpaid charges and interest.
-
Your statement balance shows you what to pay each month to avoid interest charges.
-
Credit bureaus can’t see your current balance; lenders only report your statement balance each billing cycle.
As you manage your credit card account, you’ll likely come across two similar terms: statement balance and current balance. And although they may sound the same, your statement balance and current balance are distinctly different. Understanding this difference is essential, especially when making payments and considering the overall health of your credit.
Your statement balance is the balance on your account as of the day your billing cycle ends. It includes every transaction you’ve made during that billing cycle and any unpaid balances from previous billing cycles. On the other hand, your current balance is the current total of all outstanding transactions and interest posted to your account. This includes any charges made after your last statement was generated (except for charges still pending). Let’s take a closer look at what sets a statement balance and current balance apart.
What is your statement balance?
Your credit card company calculates your statement balance in line with your billing cycle, which is the time between the close of your last statement and your current statement (usually 28 to 31 days, according to Experian®). Your statement balance includes the charges posted to your account within that specific billing cycle, plus any amount leftover from previous statements, including interest. Transactions made after a monthly statement gets generated, including any pending transaction that posts, will appear on the statement balance for your next billing cycle.
Your statement balance appears on your monthly credit card statement, available online or by mail, depending on your paperless billing preference. The statement balance should appear toward the top, typically under your account number and current billing cycle information.
What is your current balance?
While your monthly statement balance appears as a fixed number at the end of each billing cycle, the current balance on your credit card can fluctuate—primarily if you use your card for day-to-day purchases. Your current balance reflects any new transactions or payments posted to your credit card account since your last statement closed. It also includes the total unpaid charges from your previous billing cycle and the applicable interest charge for that outstanding amount. You can find your current balance by logging into your account online.
Because it can change daily based on your account activity, it’s essential to refer to your current balance when determining your available credit, especially before making a purchase. However, you’ll want to refer to your statement balance when paying your monthly credit card bill.
Learn More
When is your statement balance due?
Your credit card issuer uses the total amount of your credit card statement balance—plus any interest and late fee, if applicable—to calculate your monthly minimum payment. When you receive your monthly credit card statement, you’ll find your statement balance posted with your minimum payment and due date. You’ll need to pay the minimum by the due date to avoid potential late payment fees. And you’ll have to pay off the entire statement balance to avoid an interest charge. If you can only pay part of your statement balance at the end of your billing cycle, paying the remaining amount by the end of your next billing cycle will help you avoid compounding interest (an interest charge that accrues on interest).
Your monthly statement balance will also include any balance transfers or cash advances from that billing cycle. Consider that the terms for these types of transactions may differ from regular purchases. For example, a cash advance typically begins accruing interest immediately; starting your repayment as soon as possible—even before your next statement’s due date—can help to reduce the interest you’ll owe. In fact, paying any portion of your credit card balance early can help you manage your credit card debt, improve your credit score, and minimize interest.
Reviewing your statement balances from each previous billing cycle can also help you better understand your spending habits to choose the best credit card for you. If you tend to carry an outstanding balance, the best credit card may be one with a low interest rate. A credit card with a higher credit limit could make it easier to maintain a high available balance and a low credit utilization rate.
How can you track your account balances?
Keeping track of your account balance is critical to managing your finances, from monitoring your credit utilization to minimizing credit card debt. Paper statements can be helpful, but you’ll likely want to utilize your account’s online banking services.
Many credit card companies have a mobile banking app (in addition to their online banking service) that allows you to check your current balance in real-time and view your past and present statement balances.
Did you know?
Your mobile app may also let you set up automatic spending alerts to notify you when you reach a certain balance or get too close to your credit limit. You could even schedule automatic payments to help you avoid late or missed payments.
Does your statement balance or current balance impact your credit score?
Your credit card statement balance is the amount your credit card issuer reports to the three major credit bureaus each month. Each credit bureau records statement balances from each relevant credit card company on your credit report as amounts owed. Your credit utilization ratio measures the amount of your total available credit in use and makes up 30% of your credit score. So a high statement balance may lower your credit score because it shows you have low available credit. However, credit bureaus can’t see your current credit card balance, so it won’t impact your credit score if you pay off new charges before the close of your billing cycle.
Credit cards, along with your debit card and savings account, make valuable tools for handling expenses. They're also critical for building a credit history. Understanding the difference between your statement balance and your current balance can make it easier to track what you owe, when it’s due, any potential interest charge, and your available credit. These essential factors of responsible credit management can make all the difference for your financial wellness.
