Credit Card Statement Balance vs. Current Balance Explained

Have you ever wondered why there are different credit card balances? There’s the statement balance that appears on your credit card bill, and then there’s your current balance. If you’ve been confused about why there are two different balances — or wondered which is the better one to pay — you’re not alone.

What Is a Credit Card Statement Balance?

A credit card statement balance is the amount that is on your monthly bill. It includes everything you spent for that given billing cycle, plus any additional fees, interest charges and balances carried over from previous months. If you made any payments on the account during the billing period, that amount is subtracted from your total.¹

For example, if your statement date is June 1st, then any charges made on or after June 2nd will count toward the next billing cycle. So, if your statement balance is $150 on June 1st and you make a purchase for $25 on June 5th, your statement balance would still be $150.

What Is a Credit Card Current Balance?

Your credit card current balance is what you owe to your credit card company at a particular moment in time.² If you log into your account, your current balance should appear.

As you use your credit card throughout the month, your current balance may fluctuate. Sometimes, a new purchase might be pending. Once that purchase goes through, it is then added to the current balance.

Using the example above, if your June 1st statement balance was $150 and you made a $25 purchase on June 5th, your current balance would update to $175.

Why Do the Statement Balance and Current Balance Differ?

Although it’s possible for a statement balance and a current balance to be the same at certain points in time, especially if you use the card infrequently, more often than not, they will be different.

Once your statement is processed, that statement balance remains fixed until the next statement date. In other words, if it’s $150 on June 1st, it won’t change again until July 1st when the next statement is issued.

Your current balance, however, changes every time there is a new transaction, a payment is made or a fee is incurred.

Which Balance Should You Pay?

When you receive your credit card statement or log into your account or app to make a payment, you are usually given a few options:

• Pay the minimum amount due. This is the amount you need to pay by the due date to keep your account in good standing and avoid a late payment fee.

• Pay the statement balance. If you pay the full amount of your statement balance, you can usually avoid paying any interest charges. If you don’t pay your full statement balance, what’s left will carry over to the next month’s statement, and interest will be charged.³

• Pay the current balance. This option has you paying both your statement balance and any additional charges you’ve made since the billing period ended.

• A customized amount. You also have the option to pay any amount you’d like, as long as it’s the minimum amount or more.

Advantages to paying the statement balance

• You can avoid paying interest. If your card has a grace period (most do), then you won’t be charged interest as long as you pay your statement balance by the due date.³ Grace periods must be 21 days or more.⁴ That means that even if there are new purchases made after your statement date, you can leave those for the next bill and not incur any additional cost.

• You can keep more available cash for other things. Let’s say your statement balance is $150 but then you make a $200 purchase a few days later. While you can go ahead and make a $350 payment — your current balance — if you are able, it may make more sense for your budget to wait until the next bill (or your next pay period when you have more cash flow).

Advantages to paying the current balance

• You can get a jump on next month’s bill. If you have the extra cash on hand and want to pay your current balance, go ahead and do so. Freeing up your credit line is always a good thing.¹

• It can help keep your utilization lower. Your credit card issuer reports your statement balance to the credit bureaus. If you’re working on maximizing your credit score, then you’ll want that balance to be as low as possible.⁵ This is because your credit utilization, or how high your balance is compared to your total credit limit, plays a big role in the credit score calculation.⁶

  That’s why you might have heard mortgage experts recommend that you avoid making large credit card purchases while you’re going through a home loan application process since it could cause a drop in your credit score.⁷

When Do You Get Charged Interest?

Credit card interest can be significant for people who carry balances. However, you can avoid ever paying interest if you pay your statement balance in full each month.

But let’s say in a given month that you only make your minimum payment or less than your full statement balance. This means that you lose your grace period and interest will start to kick in.

Exactly when card issuers begin charging interest can vary by issuer, but many will start back from the billing date, and interest will keep accruing until you pay the full balance.⁸

How Does Each Balance Impact Your Credit?

Your FICO® Score is calculated based on several factors, and the second-most important one is how you utilize the credit that you have.⁶ For example, if you have a $5,000 credit limit and you have a $3,000 balance, you are utilizing 60% of your credit. The lower your credit utilization is, the better it is for your score.

You might be thinking that because you pay your bill in full most months, you are acing the utilization portion of your credit score, but it depends. It’s your statement balance that is reported to the credit bureaus each month, so if your balance is coming close to your card’s limit, it can have a temporary negative impact even if you end up paying that bill in full.⁵

If this is a concern for you, consider payment strategies that will lower your reported statement balance.⁹ That could mean paying the current balance rather than the statement balance. Or, instead of making one large monthly payment, make a few smaller payments throughout the month so that the balance reported to the credit bureau will be lower.¹⁰

Mind Your Balances

Understanding key credit card terms, including your statement balance and your current balance, can help you better manage your finances. At the very least, you’ll know how much you’ll need to pay to avoid interest charges, as well as how your payment choices may impact your utilization.¹¹

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Author Bio

Dawn Papandrea is a journalist with more than two decades of experience covering personal finance and consumer issues. She has written for leading financial publications and organizations, including U.S. News & World Report, Investopedia, Bankrate and others.