Your current balance updates whenever you make a purchase or a payment, while your statement balance is decided at the end of the month.
Whether your goal is to use credit cards for convenience or to earn rewards as you spend, understanding how your card works is crucial to managing your account responsibly.
At the end of your billing cycle, your credit card issuer will send you a billing statement. On it, you may see several different numbers: the minimum payment due, statement balance and current balance. While it’s pretty clear what your minimum payment due is, the others might not be so obvious. Don’t worry, we’ll tell you everything you need to know about your billing statement.
What is a statement balance?
Your statement balance is what you owe on your credit card from the transactions you made during your last billing cycle, plus any fees and interest accrued if you carried a balance. Your billing cycle typically runs between 28 and 31 days, with an average length of around 30 days.
Your statement balance is generated on the last day of your billing cycle -- your closing date -- and it won’t change until the end of your next billing cycle.
At the end of it, you’ll receive your credit card statement from your credit card issuer with a summary of transactions, including your purchases, payments, credits, balance transfers, cash advances, fees and interest charges. It will also include your statement balance, minimum payment due and your payment due date, among other details.
It’s important to pay off your statement balance in full before your payment due date. If a balance carries over from one billing cycle to the next, it will accrue interest.
If you can’t pay off your statement balance completely, try to pay more than the minimum due to lower the cost of the interest charges.
What is your current balance?
Unlike your statement balance, your current balance can change regularly. It represents how much you owe on your credit card account at any given time. It’ll likely differ from your statement balance depending on how frequently you use your card.
The number will reflect your most recent statement balance plus any transactions -- whether a payment or a new purchase -- you’ve made after your closing date.
For example, if your statement balance was $515 and you made no additional transactions -- and incurred no fees or interest charges -- since the billing cycle closed, your current balance would also be $515. However, if you made a $35 purchase after the billing cycle closed, your current balance would increase to $550, but your statement balance would still be $515.
Instead, the $35 would be added to the next statement balance, when the current billing cycle closed.
It’s normal for your current balance to fluctuate, but your statement balance records all purchases from the most recent billing cycle. You can check your current balance any time by logging onto your online credit card account.
Why are your statement balance and current balance different?
The two balances might look different because your statement balance ends on your closing date, so the amount won’t change until your next billing cycle ends, producing a new statement balance. Your current balance, on the other hand, will fluctuate depending on your card activity.
If you use your card to make a purchase after your closing date, your current balance will be higher than your statement balance. Conversely, making a payment will cause the current balance to decrease. Meanwhile, your statement balance remains the same regardless of your card activity.
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Should you pay your statement balance or current balance?
You have to pay your statement balance -- not your minimum payment due -- in full by your payment due date to avoid accruing interest.
You don’t necessarily have to pay your current balance if your current balance is greater than your statement balance. Even if you use your card after your last billing cycle ends, your statement balance won’t change.
If your statement balance is lower than your current balance, you might opt to pay only your statement balance because it’s the minimum amount you can pay to avoid interest without tying up more cash than is necessary.
That said, you may opt to pay your current balance to avoid debt or reduce your credit usage. You can make payments toward your credit card’s current balance several times throughout the month to stay “ahead” of your debt or make sure you’re sticking to a budget or spending plan.
How your balance impacts your credit score
Payment history (i.e., whether you pay your credit card bill on time) is the largest contributing factor to your FICO credit score, so making at least the minimum payment on your statement balance by the due date can help your score.
If you were to pay only the minimum due on your credit card, however, the difference between your minimum payment amount and your statement balance would begin accruing interest until the amount was paid off. And if you make only the minimum payment for the long haul, it can take years (or even decades) to pay off your balance, depending on how much you owe.
Besides avoiding the interest charges, making more than the minimum payment offers the additional benefit of reducing your credit usage, which can also boost your credit score. Both FICO and VantageScore consider how much debt you owe in relation to your credit limits -- or your credit utilization -- when determining creditworthiness. Most experts suggest keeping this ratio below 30% of your available credit, but lower is better.
Though paying off your current balance early isn’t required to avoid interest or keep your account in good standing, any additional payments you make toward your credit card balance help lower your credit utilization, which can have a positive impact on your credit score.
The bottom line
Your statement balance and current balance are important terms to understand, but knowing how these balances differ in real-world terms is crucial.
Generally speaking, your statement balance is calculated on the final date of your billing cycle and won’t change. In contrast, your current balance reflects your statement balance and any new purchases or payments you’ve made.
You should always strive to pay off your statement balance in full each month by the due date to avoid costly interest charges. It isn’t necessary to pay off the current balance before the end of a billing cycle, but doing so can help maintain a low credit utilization and boost your credit score.
Correction: An earlier version of this article was assisted by an AI engine and it mischaracterized some aspects of credit cards. Those points were all corrected. This version has been substantially updated by a staff writer.
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