Credit Card Balances: Current vs Statement Balances Defined

The main difference between current and statement balances is that the current balance is what you currently owe at any given point in time, while the statement balance refers to what you owe as of the end of your billing cycle.

Credit Card Current Balance Defined

The current balance on your credit card is the amount you currently owe at any given point in time.

It’s a snapshot of your outstanding balance based on the sum of your total transactions up to a specific date.

These transactions can include purchases, payments, refunds, fees, and interest charges.

Your current balance fluctuates, sometimes daily, according to the transactions processed on your card.

Basically, it functions as a running tally of the amount you owe to your card issuer.

There are two dates you should be aware of when examining the transactions that constitute your current balance: the transaction date and posting date.

The transaction date refers to the date you conduct a transaction, such as a purchase, cash withdrawal, or payment.

Each transaction you make isn’t applied to your current balance right away – it must first be approved, cleared, and settled.

However, it will still appear in your transaction history, which means it’s pending.

The posting date is the date a transaction is applied to your account, which means your card issuer has successfully processed it.

The addition of a newly posted transaction will update your current balance accordingly.

It could take one or two days for a transaction to post to your account.

As a result, your current balance may not reflect your latest card activities.

Being conscious of this delay is vital, especially if you intend to close a credit card account.

It’s prudent to wait for any last-minute transactions to post to ensure that you pay off the entire balance, not just what’s outstanding now.

While the current balance represents the amount you owe up to a specific date, there’s no requirement for you to pay it to avoid interest.

As long as your grace period remains in effect, interest doesn’t accrue on your current balance.

The only exception is a cash advance; interest charges begin accumulating from the day you make your withdrawal.

Lady smiling holding credit card

Credit Card Statement Balance Defined

The statement balance refers to the amount you owe to your card issuer at the end of your credit card’s billing cycle.

A billing cycle spans one month (28 – 31 days).

Your statement balance is the sum of the transactions processed to your card’s account during the billing cycle.

It includes purchases, payments, fees, refunds, and any unpaid balance from the prior period.

As with a current balance, only transactions posted to your account within this time frame are included as part of your statement balance.

So, if you purchased an item on the last day of your billing cycle, it’ll likely be rolled over to the next month since it takes a day or two to post.

Your statement balance appears on your credit card statement, which you receive from your card issuer at the close of each billing cycle.

In addition to your balance owing, the statement contains the payment due date, the minimum payment required, and details of each transaction made during the period.

You should pay your statement balance in full by the due date if possible.

Failing to do so will result in the unpaid portion carrying over into the next billing cycle.

As a result, you’ll lose your grace period and incur interest charges on the balance and any new purchases.

To avoid harming your credit score from late payments, strive to pay the minimum amount required by the due date.

By doing so, your card issuer will deem your payment as being on time, even if it covers only a tiny portion of the balance.

Credit Card Balances and Credit Scores

Keeping track of your credit card balance is crucial as it can impact your credit score, both positively and negatively.

Several factors contribute to your overall credit score, but the one most relevant to your card’s outstanding balance is your credit utilization ratio.

The credit utilization ratio is a financial metric that measures how much of your available credit you utilize at any given point in time.

For example, suppose you have a credit card with a $5,000 credit limit, and your outstanding balance is $1,000.

This means that you’re currently using 20% of your available credit ($1,000 / $5,000).

The industry wide recommendation is to keep your credit utilization at 30% or less.

Exceeding this threshold can impair your credit score, as a high ratio suggests to credit agencies that you may be experiencing financial trouble.

This rule of thumb applies to each revolving credit account you use and your credit accounts in aggregate.

Your current balance can vary – sometimes significantly – from your statement balance.

However, the statement balance is what your card issuers typically report to credit agencies, so it’s the figure that you should monitor more closely.

In addition to the credit utilization ratio, your payment history is another vital aspect that contributes to your credit score.

This component, which measures how timely your payments are, also relates to your credit card balance.

Should you fail to pay the minimum amount required, which is calculated as a percentage of your statement balance, your credit score will take a hit.

The reason is that you must pay at least the minimum to keep your account current.

A payment late by more than 30 days can damage your credit score.

Did You Know?

Your credit utilization ratio comprises 30% of your credit score.

Frequently Asked Questions

  • How do I check my balance on my credit card?
  • What happens if I overpay my credit card balance?

Mark is a freelance writer who specializes in covering personal finance topics related to investing, mortgages, credit cards, and more.

He is passionate about educating people on how the financial markets work and providing tips to help them better manage their money. Mark holds a bachelor’s degree in finance from the Northern Alberta Institute of Technology and has more than a decade of experience as an accountant.

Outside of writing and finance, he enjoys playing poker, going to the gym, composing music, and learning about digital marketing.