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What is a Credit Card Balance?

Last Updated: November 21, 2023
3 min read

Key points about: credit card balance

  1. Your credit card balance is what you owe your credit card company at any given time, excluding pending charges.

  2. Your credit card balance may differ from the statement balance posted on your monthly card statement.

  3. Your credit card balance includes all transactions and fees posted since your last statement, and any unpaid amount from your previous statement, with applicable interest.

Your credit card balance is a figure worth understanding. Put plainly, your credit card balance is the amount you owe your credit card issuer as of the moment you check it. But there’s more to it than that, and knowing what goes into your credit card balance can help you stay on top of your credit card debt. So let’s learn the ins and outs of your credit card balance and different ways you can manage it.

How is your credit card balance calculated?

Your credit card balance is the sum of your posted activity (including purchases, payments, balance transfers, cash advances, interest, and fees). If you had an outstanding balance from the previous month, your current balance is calculated by adding new activity to the outstanding balance. Your current balance doesn’t reflect pending payments or transactions. You can expect your credit card balance to fluctuate, increasing with charges and decreasing with payments.

What is a current credit card balance vs. a statement balance?

Your credit card balance is different than your statement balance, which is the amount you owe at the close of your billing cycle, documented on your monthly credit card statement. Your statement balance is updated once per month, whereas your credit card balance can fluctuate daily.

Your statement balance is the balance that’s subject to a minimum payment (also listed on your monthly billing statement) and interest. If you only pay the minimum payment by the due date, you’ll pay interest on the unpaid portion of your statement balance based on your current credit card interest rate. But if you pay the statement balance in full by the payment due date, otherwise known as the grace period, you won’t pay interest on that month’s purchases.

What is a credit card balance vs. a credit limit?

Your credit limit is the total amount you can spend according to your credit card company. Your credit balance represents the portion of your card’s credit limit in use—the higher your credit card balance, the lower your available credit.

It’s possible to max out your credit card by spending up to your credit card limit. If your credit card balance is equal to your credit limit, further charges may get declined until you pay down your balance. Nearing or reaching your credit limit impacts your credit utilization (the amount you’re using compared to your total credit limit), which may lower your credit score.

How do statement credits impact your credit card balance?

Money credited to your account is called a statement credit. Statement credits include redeemed rewards from a rewards credit card or refunds from purchases made with your card. Statement credits reduce your current balance but do not count as credit card payments. You’re still responsible for making your minimum monthly payments.

Depending on your outstanding balance and total statement credits, you could end up with a negative balance. For example, if you have a $100 balance and receive a $200 refund, you’ll have a negative balance of $100, which future charges would reconcile.

What is a balance transfer credit card?

A balance transfer card may help you get out of debt quicker by providing a way to move some high-interest credit debt to a credit card with a lower interest rate, saving you money on interest charges. And consolidating multiple credit card balances into one may provide one lower monthly payment.

A credit card balance transfer may also come with a balance transfer offer, like an introductory period of 0% interest, allowing you to pay down your credit card balance without accumulating additional debt from interest (if done during the promotional period). However, you may get charged a balance transfer fee, typically a small percentage of the total amount transferred.

If you plan to make a balance transfer, be mindful of the credit limit on your new balance transfer credit card. You’ll want to ensure the credit card limit is high enough to cover the balance you intend to transfer; otherwise, you may not be able to complete the transfer.

Did you know?

See if a balance transfer credit card from Discover may be able to help you save money on interest.

By understanding your credit card balance, you can better manage your debt. Now that you know what a credit card balance is, how it gets calculated, and how to pay it down, you can handle your credit card account more confidently.

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