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  • Dave Fullerton

What’s the Difference- Credit Statement Balance vs Current Balance

If you use your credit card for day-to-day purchases, there’s a good chance that your statement balance will be different from your current balance. Here’s why.


Your statement balance gives you a glance at everything that has happened to your account in the past billing cycle. Though it may stay stagnant until the next cycle closes, other factors like payments and charges can affect your total credit card balance throughout the period!


On the other hand, your current balance reflects the total of all charges and payments to your account, which changes every transaction. So, if you’ve made a few purchases since your statement closing date (the date that one billing cycle closes and after which the next begins), then your current balance will be higher than your statement balance. However, if you’ve made a payment since your statement closing date and no other transactions have occurred, your current balance will likely be lower than your statement balance.


Pay off your statement balance to avoid interest charges.

Paying your statement in full before or by its due date could lead to major benefits: not only will you save on your costly interest charges, but it can also positively improve your credit utilization ratio and overall credit health. Win-win!


But life happens, and sometimes it’s not feasible. In that case, make at least your minimum payment if you can’t afford to pay off your balance by the due date. You will accrue interest, but making at least your minimum payment on time will help you avoid late fees and negative marks on your credit reports.


However, there can be a possible saving grace. Credit card issuers don’t have to give customers a break, but if they choose to be generous and do so, the minimum grace period allowed is twenty-one days. That means you won't incur extra interest charges if your statement balance is taken care of before those three weeks are up!

Tip: Read the terms before signing up for a new credit card.


Using automatic payments to avoid interest charges

Gone are the days of typing in credit card numbers and manually setting up payments. Now, many issuers offer automatic payment options, so you don't have to worry about missing due dates –choose 'statement balance' as your option! Check with your issuer today and see if autopay is available for you.


If there’s no autopay option, it is also a good idea to set a reminder on your calendar a few days before your payment date to ensure enough funds are in your bank account to process the payment.


Exceptions: Some transactions, like cash advances, do not fall under the same “grace period” rules that typically apply to purchases. Instead, they begin accruing interest the moment you take one out. If this is you, we suggest paying it off as soon as possible, regardless of whether you’ve received your statement yet.


How your current balance affects credit utilization ratio.

It's no secret that your credit utilization rate can affect your overall credit score. It may surprise you, though, to learn that the balance reported by your issuer might influence this metric too! Knowing how much of available credit is being used at any given time could help maintain a low ratio - and potentially boost those scores - so be sure to check out our guide on understanding your credit score to learn its impact.


Credit bureaus calculate credit utilization rates of the balances they receive from credit card issuers. Many issuers report their cardholders’ statement balances, but some may send current balances instead.


If you’re worried, check with your credit card issuer to find out which balance it reports to the credit bureaus. If your issuer happens to report current balances instead of statement balances, ask which day of the month it reports.


Tip: When you’re worried that your credit utilization rate is too high, aim to pay down your current balance whenever possible. A good goal is a current balance below 35% or below your total credit limit.


Bottom Line

Having credit card debt can be a weight on your mind - and your wallet. But it doesn't have to be! There are two choices here when you're planning how to pay off that balance: paying the statement or the current balance by their respective due date. Which you choose boils down to personal preference and financial goals.


The great news is that either way will help drive down those interest charges and improve your financial health. However, knowing both options set you up for success, so congratulations...you’re taking control of this situation!


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