Statement balance vs. current balance: What’s the difference?
April 6, 2023
Your statement balance is the amount owed on your credit card during your latest billing cycle, while your current balance is how much you owe in total today.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The key difference between statement balance vs. current balance is that your statement balance is for your previous billing cycle. The current balance is what you owe on your credit card after recent purchases that are not yet paid off. This doesn’t mean the statement balance isn’t important, though. Both can affect your credit.
In this short guide, you’ll learn the difference between these balances and how you can manage them to maintain or raise your credit score.
What is a statement balance?
Your credit card statement balance consists of all of the purchases and payments you made in the last billing cycle plus any previously unpaid balances and fees and the interest those accrued. It is generated on the last day of your billing cycle, also called the closing day.
To understand your statement balance, you need to know when your billing cycle is. You can find this on your monthly statement, which will list a start and end date. It may also list the number of days in the billing cycle, which can span anywhere from 20 to 45 days.
If you do not see this, simply add up the number of days between your start and end billing date to calculate the length of your billing cycle. This will give you a better understanding of when to make payments and which transactions fall under which cycle.
What does current balance mean?
The difference between a statement balance and a current balance is that the current balance is dynamic, so it’s always changing. It may be higher or lower than your statement balance, which is only updated on the closing day of your billing cycle.
If you use your credit card to make day-to-day purchases, your current balance could be higher than your statement balance if you have not made any payments.
Alternatively, if you have made payments on your card but have not made any purchases, your current balance would be lower than your statement balance.
Your statement balance remains the same until the closing day of the most recent cycle, at which time it will update with all payments, purchases, interest and fees accrued during that cycle.
The key differences between current balance vs. statement balance include:
- Statement balance is based on your last billing cycle
- Current balance looks at recent purchases
- Current balance changes regularly based on your credit card usage
As you’ll learn, both your current balance and statement balance can affect your credit.
Current balance vs. available credit
Your available credit is the difference between your current balance and overall credit limit. For example, if you have a credit card with a $1,000 limit and a current balance of $700, your available credit would be $300.
Why is my statement balance more than my current balance?
If your statement balance is more than your current balance, it may be because you paid your credit card bill after the end of your billing cycle, and haven't used your card since then.
As mentioned above, balances may be the same or different depending on your personal credit card usage.
How does my balance affect my credit utilization ratio?
Your statement balance is what primarily determines your utilization ratio, which makes up 30 percent of your credit score. Your credit utilization ratio, which is how much of your available credit you’ve used, can also be affected by your current balance, depending on when your card issuer reports it to the credit bureaus. Typically, the lower your credit utilization ratio is when it’s reported, the better it is for your credit.
It’s helpful to look at your available credit in the broader context of all of your credit cards as well, rather than just the available credit for one card. Your credit is based on your overall utilization rate and not just the rate for one card. To find your overall utilization rate, you’ll need to add up all of the current balances for each card and compare it to your overall credit limit.
How to calculate your credit utilization ratio
Your credit utilization ratio is your current balance divided by your credit limit. As a general rule of thumb, it’s best to keep your credit utilization at or below 30 percent of your credit limit.
For example, if you have $300 in available credit on a card with a $1,000 limit, you have a current balance of $700. In this scenario, your utilization ratio would be 70 percent, which is high. Ideally, you’d want your current balance to be less than $300 to stay under 30 percent.
To calculate your utilization ratio, use the following formula:
(Current balance ÷ Credit limit) x 100 = Credit utilization ratio)
Should I pay my remaining statement balance or current balance?
When making a payment on a credit card, you can choose to simply make the minimum payment each month. However, credit cards come with high interest rates, and paying only the minimum payment each month will likely cause you to spend a lot in interest.
If you want to avoid interest charges, you should aim to pay off the statement balance. You may also choose to pay off your current balance, although this isn’t necessary to avoid interest. As long as your statement balance is paid off, you’re in good shape.
Some considerations:
- How much available credit do you have?
- Can you pay your statement balance in full?
- Should other financial obligations take priority over paying the balance in full?
- If you can’t pay in full, can you pay more than the minimum payment?
- Does your card company offer a grace period for late payments that won’t affect your score?
While paying down your current balance isn’t necessary in relation to interest payments, it may help you lower your credit utilization, or how much of your credit limit you’re using.
Your current balance is not reported to credit bureaus in real time, but it may be advantageous to pay it down so that you’ll have a lower statement balance—which is the number that affects your credit.
How automatic payments can help you avoid interest
Automatic payments can help you avoid interest charges if you have the available funds. Interest charges make your purchases cost more than what you originally paid, and these add up over time. Most credit card companies have an automatic payment option through their website, and you can elect to pay your statement balance in full each month.
Paying off your statement balance is ideal because it helps you avoid not only interest but also accidental late payments.
When do you get charged interest on a credit card?
You get charged interest on any remaining credit card balances that are unpaid by the monthly due date. The unpaid balance then rolls over to the next billing cycle, and interest accrues daily based on your specific card's rate. Paying off your balance in full before the end of each billing cycle can help you save money on interest.
Don’t let payment errors harm your credit score
Staying on top of credit card payments by enrolling in autopay or using other reminders is a great way to keep your credit in good shape and set yourself up for long-term financial success. But sometimes, late payments or missed payments are reported in error.
Lexington Law Firm works to help clients address errors on their credit reports that are harming their credit. If your credit is being affected by inaccurate or unfair late payments, allow our team to provide you with a free consultation. Contact us today so we can help you with your credit.
Sarah Raja was born and raised in Phoenix, Arizona. In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts.
Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
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