Reviewed by Michelle TipswordStatement Balance vs. Current Balance: What’s the Difference?
Reviewed by Michelle Tipsword
Quick Answer
- A statement balance is the amount that’s due at the end of a billing cycle, while your current balance is your total balance as of today.
- You should pay your statement balance in full every month to avoid interest charges, but you can also pay your current balance if you prefer not to have a balance at all.
Even for experienced credit card holders, credit card billing cycles and balances can be confusing. Statement balances appear in your credit card statements and determine your minimum payments. But these can differ from your current balance, which is what you see when you check your card's balance.
The difference between statement balances and current balances can be important for your credit scores and for managing your payments.
| Statement Balance | Current Balance | |
|---|---|---|
| Definition | Amount owed at the end of a billing cycle | Total amount currently owed |
| Includes | Only posted transactions during the billing cycle | All posted transactions |
| Updates | Monthly | Daily depending on activity |
What Is a Statement Balance?
A credit card's statement balance is the total amount you owe at the end of each billing cycle. Your card issuer takes a snapshot of your balance, creates the statement and sends you the statement and bill.
The credit card statement lists all the transactions that occurred during the previous statement period, including purchases, credits, fees and interest. It adds these up to determine your statement balance, which may also be called the new balance.
Example: During your billing cycle, you make 10 purchases totaling $400 and receive a refund for $50. This gives you a statement balance of $350.
What Is a Current Balance?
Your credit card's current balance is the balance that includes all posted and pending transactions you see when you check your card account. It can rise and fall throughout the billing cycle as new purchases and payments are posted to your account.
If you have pending transactions, those might not be included in your current balance. However, they can still lower your available credit and affect how much you can spend before hitting your credit limit.
Example: Let's make the following assumptions:
- Billing cycle: July 1 to 31
- Statement balance: $350
- Payment due date: August 20
- New purchases August 1-10: $200
If you check your current balance on August 10, it'd be $550 ($350 + $200).
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Should I Pay the Statement Balance or Current Balance?
You should aim to pay the statement balance every month to avoid interest charges. At the minimum, you should make the minimum payment due by your bill's due date to avoid a late payment, late fees and potential damage to your credit.
Here's an overview of the different payment options you have.
- Minimum payment: The minimum payment is the amount you have to pay on time to avoid late payment fees and penalties. How much it is depends on your statement balance and the card's terms, and it's generally due about 21 to 25 days after you receive your statement.
- Statement balance: If you pay the statement balance (or more) by the due date, you maintain your credit card's grace period and won't accrue interest on new purchases. Pay this amount each month, and you won't pay interest on your credit card purchases.
- Current balance: Paying the current balance will bring your card's balance down to $0 and can be helpful if you want to free up available credit for major purchases.
- Other amount: As long as you pay at least the minimum amount due, you can pay whatever additional amount you like toward your balance.
Tip: Even if you can't afford to pay your current balance or the statement balance in full, paying more than the minimum balance can help you pay off your credit card sooner and pay less interest. Some newer credit scoring models may also consider whether you regularly pay more than the minimum balance when calculating your credit scores.
How Do Your Balances Affect Your Credit?
Your credit card balance can have a direct impact on your credit scores. However, the balance that matters is the balance on your credit report, which likely won't be your current balance.
Credit card issuers generally send an update to the credit bureaus monthly, often shortly after the end of each billing cycle. (You can ask your card issuer if you want to know the exact timing.) The reported balance may be the same or similar to your statement balance. And the balance on your credit report stays the same until your credit card issuer sends another update.
The card's balance can affect your credit scores because your credit utilization ratio (a significant scoring factor) depends on the card's reported balance relative to its reported credit limit. A low credit utilization ratio is best for your credit scores, and a high balance might hurt your scores.
Because card balances usually get reported to the bureaus weeks before the bill's due date, you can have a high utilization ratio even if you pay your statement balance in full. But using the card less, raising your credit limit or making early payments might help lower your utilization rate and help your credit scores.
When Do You Get Charged Interest?
Credit card issuers charge you interest when you carry part of your balance from one billing cycle to the next—in other words, when you pay less than the statement balance.
If you pay less than the statement balance, the amount left over revolves to your next billing period and starts accruing interest. New purchases also begin to accrue interest immediately. Similarly, balance transfers and cash advances can immediately accrue interest even if you've paid the statement balance in full.
Tip: When you have a promotional 0% introductory APR offer on a card, you won't incur interest until the intro period ends as long as you adhere to the offer's rules.
Track Your Reported Balances and Utilization
Use the free credit monitoring tools from Experian to see how your card's reported balances and the resulting utilization rates impact your credit scores. You'll receive access to your Experian credit report for free each month, along with a FICO® ScoreΘ based on the report and real-time alerts when there are important credit changes in your credit report. You can also check your credit report to see each card's reported balance, its utilization ratio and your overall utilization ratio.
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About the author
Louis DeNicola
Louis DeNicola is freelance personal finance and credit writer who works with Fortune 500 financial services firms, FinTech startups, and non-profits to teach people about money and credit. His clients include BlueVine, Discover, LendingTree, Money Management International, U.S News and Wirecutter.
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