What’s the Difference Between a Statement Balance and a Current Balance?
Key points about: your statement balance vs. current 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 twenty-eight to thirty-one days). 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 statement balance 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.
When is your statement balance due?
The total amount of your statement balance—plus any interest and fees—is used 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 interest charges. 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 (interest charged 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 debt, improve your credit score, and minimize interest.
How can you track your account balances?
Keeping track of your account balances is critical to managing your finances, from monitoring your credit utilization to minimizing interest charges. Paper statements can be helpful, but you’ll likely want to utilize your account’s online banking services.
Did you know?
Many credit card companies have a mobile banking app that allows you to check your current balance in real-time and view your past and present statement balances. 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 lender reports to the three major credit bureaus each month, reflected on your credit report as amounts owed. Your credit utilization (the amount of your total available credit in use) makes up 30% of your credit score. So a high statement balance may lower your credit score. However, credit bureaus can’t see your current credit card balance, so it won’t impact your credit score if you pay off charges before the close of your billing cycle.
Credit cards make valuable tools for handling expenses and 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, potential interest charges, and your available credit. These essential factors of responsible credit management can make all the difference in your financial wellness.
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