Credit Card Statement Balance vs. Current Balance
If you check your credit card balance by phone or online, you may be presented with two different balances: a statement balance and a current balance. These balances may be different, which can can be confusing, especially if you're trying to pay your balance in full to avoid paying finance charges. Which balance is accurate? Which one are you supposed to pay?
What Balance Appears on Your Credit Card Statement?
The statement balance is the balance that was printed on your most recent credit card billing statement. It’s your credit card balance as of your account statement closing date, which is the date your billing cycle ended and your credit card statement was generated. It's not uncommon for this balance to be different from your current account balance.
The balance that appears on your credit card statement is often the balance that is reported to the credit bureaus. This explains why the balance on your credit report often doesn't reflect your current credit card balance.
Why Your Current Balance May Be Different
Your credit card activity is billed in cycles. When a billing cycle ends, the credit card issuer prints a statement detailing the activity that occurred during that billing cycle and informing you of the payment due and the due date.
Since the time your credit card statement was printed, you may have made purchases, payments or other transactions that changed your outstanding credit card balance. These transactions are reflected in the current balance. The current balance could be higher or lower than your statement balance depending on the transactions you've made. For example, if a payment has posted to your account since your billing statement was printed, your statement balance will be higher than your current balance. Or, if you made purchases since your billing cycle was printed, your statement balance will be lower than your current balance.
If you check your account online or over the phone, your current balance balance may include pending transactions. These are transactions you've made, typically within the last 24 to 48 hours, that haven't posted to your account yet. Your credit card issuer has received notification of these transactions, but they haven't completely been processed.
Which Balance to Pay to Avoid Interest Charges
To avoid paying finance charges on a balance, you typically need to have started the billing cycle with a $0 balance or at least have paid your previous balance in full before the end of the grace period. The statement balance you see may already include a finance charge if you carried a balance from the previous billing cycle. Otherwise, you have until the end of the grace period to pay the balance in full and avoid receiving a finance charge on that balance.
To ensure your statement balance is paid on time each month, you can set up an autopay with your credit card issuer. The payment will automatically draft from your bank account on the date you specify (it should be on or before the payment due date). When you set up an automatic payment, be sure you have enough funds available in your checking account. Otherwise, if your bank rejects the payments, you'll be charged a returned payment fee plus you'll end up paying finance charges since the balance wasn't paid in full by the due date.
Note you’ll be left with a balance on your credit card if you pay the full statement balance and your current balance is higher than that amount. You'll see that leftover balance plus any new transactions on your next billing statement.
Paying the full current balance is also ok, especially if you want to have a low or zero balance on your next credit card billing statement. If you want to pay off your credit balance down to zero, contact your credit card issuer to find out the "payoff balance" which may include finance charges that haven't been added to your account yet.
When you can’t afford to pay the entire statement balance, you must pay at least the minimum to avoid receiving late payment penalties. Or, pay more than the minimum if you can afford it, to reduce your credit card balance faster and reduce the amount of interest you pay over time.