These balances can be different, and this can be confusing if you’re trying to pay your balance in full to avoid paying finance charges. Which figure is accurate? Which one are you supposed to pay? That depends on your goal.
What’s the Difference Between Statement Balance and Current Balance?
Your statement balance is your credit card balance as of your account statement closing date: the date your billing cycle ended and your credit card statement was generated. You may have made purchases, payments, or other transactions since the time your credit card statement was issued. That would change your outstanding credit card balance, adding to or subtracting from it. These transactions are reflected in the current balance, so it can be higher or lower than your statement balance, depending on the transactions you’ve made. Your statement balance would be higher than your current balance if a payment posted to your account since your billing statement was issued. Your statement balance would be lower than your current balance if you made purchases since your billing cycle was issued. Your current balance might also include pending transactions if you check your account online or over the phone. These are transactions that you’ve made, typically within the last 24 to 48 hours, that haven’t officially posted to your account yet. Your credit card issuer has received notification of these transactions, but they haven’t been fully processed.
Which Balance Should You Pay?
You can avoid paying finance charges by paying your statement balance by the statement’s due date, but only if you started the billing cycle with a $0 balance, or you paid your previous balance in full by the payment due date. This is the end of the “grace period.” You have until the end of this grace period to pay the statement balance in full to avoid a finance charge on that balance.
If You Set Up Autopay
You can set up autopay with your credit card issuer to ensure that your statement balance is paid on time each month. The payment will automatically deduct from your bank account on the date you specify. It should be on or before the payment due date. You may still have a balance left even if you pay the statement balance if you made new charges after your statement was issued. You’ll see that leftover balance plus any new transactions on your next billing statement in this case. You can also pay the full current balance if you want to have a low or zero balance on your next credit card billing statement. Contact your credit card issuer to find out the “payoff balance” if you want to bring your credit card balance down to zero. It may include finance charges that haven’t yet been added to your account. You must pay at least the minimum to avoid receiving late payment penalties if you can’t pay the entire statement balance. Pay more than the minimum if you can. This will reduce your credit card balance faster and lessen the amount of interest you pay over time.
The Bottom Line
The balance that appears on your credit card statement is often the balance that is reported to the credit bureaus, so it’s particularly important. That is why the balance that appears on your credit report often doesn’t reflect your current credit card balance.
