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What Is a Statement Balance for My Credit Card?

Knowing what a statement balance is can help you manage your credit cards and avoid debt.

Chris Scott

Contributing Writer at Tally

February 2, 2022

If you have a credit card, there are a few terms with which you should be familiar, including:

  • interest rate 

  • credit limit

  • due date

  • current balance

  • statement balance

Each of these can affect not only your credit card and debt, but ultimately your credit score as well. 

In this article, we offer a high-level overview of one of the terms you need to be familiar with, credit card statement balance. Specifically, we answer: 

  • What is a statement balance? 

  • When does a statement balance need to be paid? 

  • How does your statement balance affect your credit card interest? 

  • How does your statement balance affect your credit score? 

By the end of this article, you should have a much better understanding of credit card statement balances and what you need to do to manage them properly. 

What is a statement balance? 

Your statement balance represents your credit card bill for the last billing cycle. Your statement balance is formal, but it does not become official until your credit card company issues your statement. To put this into context, it helps to compare current balances vs. statement balances

Your billing cycle lasts for a predetermined period of time, typically around 30 days. During that time, you can pay for purchases with your credit card. Doing so adds to your current balance, which is a running tally of any new purchases you've made. 

At the end of your billing cycle, your credit card issuer will send you a statement. The end of the billing cycle is also known as the statement closing date. Your statement will contain your statement balance, which is the total amount that you owe at the end of your billing cycle. You will then have a due date by which you need to pay off your balance to avoid interest charges — more on that below. 

As an example, let's say that your billing cycle ends on the 25th of every month. On May 1, you put a $100 charge on your credit card. Your current balance is $100. On May 15, you charge $300 — your current balance is $400. On May 20, you pay off $50 — your current balance is $350. You make no other transactions before your billing cycle ends. On May 25, your credit card company sends you a statement. Your statement balance is $350. 

There are also a few other things worth noting. One, if you carry a balance from your previous statement — meaning you do not pay your statement balance in full — the unpaid amount, along with any interest charges and accumulated late fees — would be included as a part of your next statement balance. 


When does a statement balance need to be paid? 

Now that we've answered, "What is a statement balance?" and compared it to different balance types, let's take a closer look at when you need to pay off your statement balance. 

Your monthly statement will contain a due date. It will also contain a minimum payment required. At the very least, you should make the minimum payment on your credit card account by the due date. Otherwise, you will be charged late fees and penalties. A late payment could trigger a penalty APR, which means you're charged interest at a higher rate. 

If you make the minimum payment by the due date but do not pay your statement balance in full, you will still be charged interest. Credit card interest compounds, which means it can accumulate quickly. Good financial management calls for you to pay your full statement balance by your due date. By law, cardholders are required to have at least 21 days between their statement closing date and their due date. This time period is commonly referred to as a grace period. 

You can set up automatic payments from your bank account to ensure you pay your total balance, but you need to make sure you have enough money in your account before doing so. Otherwise, you risk being charged overdraft fees by your bank. You can also consider using a credit card payoff app like Tally†, which can help manage due dates and pay your account balance on time. 

How does your statement balance affect your credit card interest? 

As mentioned, your statement balance can affect your interest in a few different ways. If you pay your statement balance in full by the due date, you are not charged any interest. If you make the minimum payment — or some payment, but not quite the entirety of the balance — by your due date, you will be charged your regular interest rate on your balance. 

If you miss your minimum required payment, you will be charged late fees and, possibly, penalty APRs on your outstanding balance. You should always strive to pay your statement balance in full by the due date. If you cannot do so, you should at least pay the minimum and then work quickly to pay off what's remaining. 

How does your statement balance affect your credit score? 

How you handle your credit cards has a direct impact on your credit score. That's because your lender reports your activity to the three major credit bureaus

  1. Equifax

  2. Experian

  3. TransUnion 

Only your statement balances are reported to the credit bureaus. For instance, if you spend $100 on the card and pay off that $100 before your next billing cycle begins, your statement will reflect a $0 balance. The credit bureaus will have no idea that you spent money on the credit card. 

The information on your credit report ultimately leads to your credit score. There are two different types of credit scores: FICO® Scores and VantageScores. Each has similar yet different criteria for determining your credit score. 

Your FICO credit score is calculated based on the following factors and weightings: 

  • Payment history: 35% 

  • Amounts owed: 30% 

  • Length of credit history: 15% 

  • Credit mix: 10% 

  • New credit: 10% 

VantageScore doesn't define the exact percentages it uses to determine scores. But here is the breakdown of factors and how influential they are: 

  • Total credit usage, balance and available credit: Extremely influential 

  • Credit mix and experience: Highly influential 

  • Payment history: Moderately influential 

  • Age of credit history: Less influential 

  • New accounts: Less influential

Your payment history directly affects your credit score, which is why it's important for you to pay off your statement balances in full during your grace period. The other primary thing that affects your credit score is your amount owed (FICO) and your total credit usage, balance and available credit (VantageScore). This is often tracked as your credit utilization ratio (or rate). 

Your credit utilization rate measures how much of your credit you're using. For instance, if you have a $5,000 line of credit and spend $500, your credit utilization rate is 10%. Ideally, you want to keep your credit utilization ratio below 30%. Based on our example, this means that your balance would not rise above $1,500. 

Remember, however, that credit bureaus do not track your current balances. They are only concerned about your statement balance. If you ensure that your statement balances are less than 30% of your total available credit, you can potentially start building a good credit score

Managing your debt can put you on the path to financial freedom 

A statement balance reflects everything you owe your credit card company at the end of a billing cycle. It represents anything you owe from your last statement, as well as any new purchases you've put on during the current billing cycle. 

Managing credit cards can be tricky. Asking yourself questions like "What is a statement balance?" shows that you are on the right track to managing them properly and staying out of credit card debt. If you're looking for further insights, be sure to subscribe to Tally's weekly newsletter. The newsletter contains valuable information that can help you manage your credit cards and reach your savings goals.

To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.