Statement Balance vs. Current Balance: What’s the Difference?
Your credit card actually has two balances you must track. Find out the differences between them here.
Contributing Writer at Tally
February 1, 2022
When you log in to your credit card account, you’re hit with many figures. Two important ones are the statement balance and current balance.
While both numbers reflect the balance on your credit card, they reflect it at different stages. They are equally important in keeping your debt in control, limiting interest charges and maintaining a good credit score.
But when looking at your statement balance vs. current balance, it can get confusing, as they can be significantly different. This may leave you wondering which is more important and which has the most impact on your debt management and credit score.
Below, we cover what your current balance is, what your statement balance is, their differences and how each impacts your debt and credit score
Credit card statement balance vs. current balance
When you check your online credit card account or your credit card issuer’s mobile app, you will see two different balance amounts: a statement balance and a current balance. Here’s how they differ.
Your credit card’s statement balance is the balance on the card at the end of the previous billing cycle or statement cycle. The credit card company uses this amount to determine your minimum payment and interest charges.
Your statement balance is also what the credit card company reports to the major credit bureaus — Experian, TransUnion and Equifax — and what appears on your credit report. Your credit utilization ratio depends heavily on this amount.
Credit card companies always feature your statement balance in a prominent place on your monthly statement, but it’s not always clearly marked. Some companies may refer to it simply as your “Balance,” some may call it a “New Balance” and others may have a different name for it. Just note that any balance listed on your statement will be your statement balance.
Current balance means the running tally on your credit card. With each purchase you make, cash advance you take out or inbound balance transfer you make, this account balance will rise, and your available credit will drop as the payments post to your account.
This amount is important because it lets you know how close you are to your credit limit.
To avoid overspending, you can also use the current balance to determine how much you’ve spent so far this month, but you must subtract the statement balance from the current balance to get this number — unless you’ve already paid off the statement balance.
Credit card companies don’t include the current balance on your credit card statement for a few reasons. First, it can confuse those who like to pay off their credit card statement balance every month. Second, it can change daily, so the current balance printed on a credit card statement may not match the balance on the day the cardholder receives their credit card bill.
After your current billing cycle ends — when the credit card company prints and mails your statement — your current balance converts to the statement balance for the following month.
How your current balance can impact your credit score and debt
When building credit, your credit card balances play a significant role in determining your FICO credit score.
Your current balance has no immediate impact on your credit score because credit card companies only report account statuses at the end of a billing cycle. However, your current balance does give you a preview of what the credit card company may report to the credit bureaus the following month.
By monitoring your current balance, you can help keep your credit utilization ratio as low as possible. This ratio can account for 30% of your FICO credit score. The lower your credit utilization rate is, the better your credit score will likely be.
Also, if you like to take advantage of the credit card interest grace period — the time between your statement closing date and the due date — by paying off your entire statement balance monthly, then monitoring this balance will help you anticipate how much you’ll need to pay the following month.
How your statement balance can impact your credit score and debt
Your statement balance will have an immediate and potentially significant impact on your credit score. This is mainly because it directly impacts your credit utilization ratio. Your statement balance is the amount the three major credit bureaus use to calculate your credit utilization relative to your credit limit.
For example, if you have a $1,000 statement balance on a credit card with a $4,000 credit limit, you have a 25% credit utilization rate. Some experts say that if that rate creeps over 30%, it will negatively impact your FICO score, though FICO doesn’t officially state this.
If you pay off that entire statement balance by the due date, your credit utilization on that card will fall to 0% when the billing cycle ends, as long as you haven’t added any additional charges to the account.
Your statement balance is also critical in taking advantage of your interest grace period, as this is the balance the credit card company will use to determine whether it applies interest to your account. If you pay off the full statement balance within the credit card grace period, the credit card company won’t apply any accrued interest charges to your account.
This allows you to use your credit card to pay all your monthly expenses and reap the rewards points or cash back without getting charged interest. Using a credit card in this manner is also great for someone who doesn’t get a consistent paycheck or a freelancer who receives multiple checks throughout the month for services rendered.
They can use the credit card to pay normal expenses as needed while collecting their checks in their bank account throughout the month and paying it off when the next statement comes.
Statement balance vs. current balance: Different but equally important
The two balances on your credit card, the statement balance and current balance, are easy to confuse. However, they are vastly different in the way they track your credit card spending: The statement balance is your balance as of the statement closing date and the current balance is a nearly live running tally of your credit card balance that becomes your new statement balance after your due date.
Proper management of both your current balance and statement balance will put you on the path toward building a good credit score, avoiding interest and maximizing your cash-back rewards.
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