Anyone who has ever logged into his or her credit card account and noticed that there is a statement balance as well as a current balance may ask himself which one to pay. For many cardholders, the terms statement balance vs current balance or what is statement balance or what is the current balance on a credit card are confusing, so they search for this.
The balances both indicate debt due on the credit card; however, they have different functions. Your statement balance is the balance due at the end of your billing cycle, and is the balance that is used to determine if a balance will be due for interest charges if you pay it all in full by the due date. Your current balance, on the other hand, represents your account balance at the moment and is updated in real time as you make purchases, payments, returns, fees or receive credits. (Citi; Experian)
Being aware of these balances can help you steer clear of extra interest, control your utilization and make better financial selections.
How Many Particles In A Statement Are Equal?
State of account balance is the complete total amount that you were due on your credit card for at the end of your credit card billing cycle.
This is determined by your credit card company on the date that your statement is mailed and includes:
Any items bought within the billing period.Any items bought within the billing period.
Any interest rates paid (if relevant)
Fees
Previous unpaid balances
This is for credits and payments made prior to the statement closing.
After you generate your statement, the statement balance won’t change until the next billing cycle — even if you keep using your credit card thereafter.
What Is Statement Balance?
When you’re wondering “what is statement balance,” it’s the balance that you see on your monthly statement from your credit card.
This figure is significant because if you receive a grace period, it’s the balance remaining that you should pay off on time to keep your grace period, which means without paying interest on new purchases.
What Is A Statement Balance On A Credit Card?
A credit card’s statement balance is just the balance that is recorded at the end of the billing cycle.
For example:
- Payment deadline: July 31st
- Purchases during cycle: $1,250
- Have you paid ahead of closing: $250
The Balance on your statement would be:
$1,000
If you purchase another $300 before June 30, your current statement balance won’t get changed but will be left at $1,000 until a new statement is generated.
What Is A Current Balance?
Your current balance is all the money that you owe at the present time.
It is unlike the statement balance which varies with each transaction on the account.
Your account’s balance may show:
- New purchases
- Pending deposits
- Payments you’ve made
- Refunds
- Credits
- Interest
- Fees
It provides the most up-to-date picture of your credit card account.
What Is The Meaning Of Current Balance In A Credit Card?
The current balance is the current balance in your account.
It may be:
If you have new purchases, then it will be higher than your statement balance.
Reduce if you have paid something after you have received your statement.
Different due to refund or credit.
It’s updated on a frequent basis, so you can use your current balance for reference.
The Difference Between Statement Balance And Current Balance
The main differences are:
Statement Balance
This will be corrected when the statement is issued.
Works for one month (one payment cycle)
Calculates the lowest amount of money that you will pay on a debt.
The amount of money needed to pay off in order to avoid paying interest on the purchases.
Current Balance
The reports for the month will be updated throughout the month.
Includes recent purchases
Reflects payments instantly as soon as they have been processed.
Displays the outstanding balance (of a debt) at a specific time
On which balance should you pay?
When it comes to paying off credit card debt, many people are unsure if they should pay the statement balance or the current balance.
Pay the Statement Balance
If you have a grace period on your account and all other terms of the issuer are met, it may be wise to pay the statement balance in full, rather than making interest payments on new purchases.
Most financial advisors agree on the amount to pay to avoid a balance if you want to pay it off.
Making A Payment To The Current Balance
With the current balance, you’re paying all your balance, which includes purchases made after your statement date.
For some, this is the choice to make, as:
They’re looking for a zero balance.
They like to be current with their payments.
They want to pay off their debt so that their credit utilization is lower prior to the next credit report.
If you don’t want to pay for everything immediately, then you do not need to immediately pay off if you pay the current balance.
What Is Meant By The Statement Balance Remaining?
Some credit card apps show a credit card’s outstanding balance.
This means:
Statement Balance − Payments You’ve Already Made = Remaining Statement Balance
For example:
Statement balance: $1,200
Payment made: $700
Remaining statement balance:
$500
When the balance on the statement is $0, then you are finished paying that billing cycle’s statement.
Is your statement balance greater than your current balance?
Yes.
This is often a case when payments have been made after the bill has been issued.
Example:
Statement balance: $900
Payment: $500
Current balance:
$400 (if nothing is bought or done)
Is your statement balance greater than your current balance?
Absolutely.
Example:
Statement balance: $800
New purchases: $300
Current balance:
$1,100
One of the most frequent explanations for the two balances being different is that one is larger than the other.
Let’s examine how statement balances impact your credit score.Let’s dive into how statement balances impact your credit score.
Your balance on the credit card may be a factor in your credit utilization ratio, depending on which credit bureaus the account issuer reports to.
If you have high balances compared to your credit limits, that can contribute to higher utilization ratios that can have a negative impact on your credit score.
Maintaining low balances and paying on time will help maintain good credit.
If you’ve reached the limit on your credit card, here are some tips for managing your credit card balance.
Use these good practices:
Pay off the statement balance when it doesn’t result in an interest bill.
Check your balance from time to time.
Don’t pay bills late.
Avoid high credit utilization.
Double check statements for mistakes.
Schedule payment reminders or payments.
The following are healthy habits to avoid interest and promote responsible credit use.
Common Misconceptions
The numbers on the statement balance and the current balance always equal one another.The statement balance and current balance will always have the same numbers.
False.
Current balance will fluctuate for the billing cycle, whereas the statement balance will be the amount at the end of the billing cycle.
Paying the Minimum Payment Avoids Interest is an option that you can use to avoid paying interest charges on your purchases.
Not always.
By paying only the minimum payment may be stopping the late fee, but interest can begin to charge on unpaid balances and depending on the terms your card issuer will give you, interest can begin to charge on new purchases as well if you lose your grace period.
Current Balance Is the Only Number That Matters” is the title of a book.
False.
The balance of the statement matters because it will let you know what you need to pay off for that month’s statement and, if you want to avoid interest charges on new purchases, you must pay off the balance.
FAQs
What is meant by statement balance?
Your statement balance is the balance you had on your credit card when the bill was due at the end of the billing cycle. It’s shown on your bill and is typically the amount you want to pay, in full, on time each month so you don’t incur interest on new purchases (unless your account doesn’t provide a grace period). (Citi; Experian)
What is the difference between the statement balance and current balance?
The statement balance is an amount that is fixed at the end of your billing cycle, and the current balance is updated every day as you purchase, pay, are refunded or charged fees.
What does “current balance” refer to on a credit card?
The current balance is the current amount you owe on your credit card, including recent transactions that will not be reflected in your last statement.
Do I pay the balance due or the current balance?
When it comes to paying off the statement balance to avoid interest on new purchases and to keep your grace period, it’s generally enough to pay off the statement balance on time. If you pay the outstanding balance, then you’ll be paying for all purchases since the statement date.
What is meant by “balance” on the remaining statement?
Remaining Statement Balance: This is the amount of unpaid statement balance. When it reaches zero, you have paid the whole balance for that billing period.
Conclusion
It is crucial to know the difference between a statement balance and current balance if you are to use your credit card wisely. The statement balance is the balance of your account at the end of your billing period, and is usually the primary amount you pay to avoid interest on new purchases; the current balance is the actual balance of your account when you log into your online account, and is adjusted whenever you make purchases, payments or get credits.
It’s important to regularly review the two balances, to pay off your statement balance promptly, and to keep an eye on your spending throughout the month so that you avoid paying unnecessary interest charges, keep your credit utilization in good shape, and develop better financial habits over time.
