Statement Balance vs. Current Balance

You don’t have to be a financial wizard to manage your credit cards successfully. While it’s good for your credit score to use a credit card, you can easily rack up bad debt if you don’t keep an eye on your balances. 

When you check your balance, however, you might be faced with two different balances on the same credit card—Statement Balance vs. Current Balance. What is the difference, and which one should you be focusing on?

Though we go into more detail below, the short version is that your statement balance includes the transactions that occurred during the last billing period while the current balance includes everything that you’ve charged to your card and haven’t paid yet, regardless of the timing.

Account Balance Overview

Let’s start with the basics of a credit card as opposed to a debit card. A credit card is a bank account that allows you to “borrow” money for purchases. You’re contractually obliged to pay back the money you use in a certain time or risk incurring interest. The amount you can use is normally restricted by a credit card limit. Your credit card limit is determined by the bank providing you with the credit and is based on your financial risk. 

The longer you owe money on a credit card, the more interest you’ll start to rack up and you’ll end up having to pay back more money than you spent. 

Besides normal transactions and interest, your balance will also include fees and penalties for late payments charged by the credit card issuer. 

Statement Balance vs. Current Balance

When you check your credit card’s account balance on your bank statement, however, you might get two different balances that don’t necessarily add up – Statement Balance vs. Current Balance.

What is a Statement Balance?

First, let’s take a look at what the Statement Balance is exactly. It’s the account balance you usually receive in a statement at the end of a billing cycle – normally around 30 days but can be more or less. This document gives you a summary of all the transactions made with the credit card during that billing cycle and how much is owed by the end of the month, including the minimum payment that’s required. This statement balance will remain the same until the end of the next billing cycle, where any new transactions and payments made during the billing cycle will reflect in the new Statement Balance. 

While the Statement Balance remains the same throughout the month, it’s not an accurate reflection of how much you actually owe at the time you check your balance. This is especially true if you use your credit card for daily purchases and you’re checking your account a few days after the last billing cycle ended and a new one began. This is where the Current Balance rolls in. 

What is a Current Balance? 

While the Statement Balance is locked in for the whole billing cycle, the Current Balance on a credit card will continuously fluctuate, updating the balance every time you swipe your credit card to make a purchase. 

Basically, the Current Balance is the true total amount owed on your credit card at any given time that you check.

What’s the Difference?

The main difference between the two is that the Statement Balance is static for a month while the Current Balance is ever-changing depending on how much you use your credit card. 

Your Current Balance tends to be higher than your Statement Balance because you’ve added more payments to it in the new billing cycle. However, your Statement Balance might be higher if you made payments after the last statement and you haven’t used your credit card much in the new billing cycle. 

It’s important to keep an eye on both, as it determines how much your compulsory minimum payment is each month and how much you owe in total. Keeping track will improve your financial security as well as maintain your vital credit score. 

How to Find Your Statement and Current Balances

Where do you compare your Statement Balance vs. Current Balances in the first place? Your first port of call should be logging in to your online credit card account. 

You’ll usually find both balances right on your home page, labeled as is, plus the amount that is payable right now. If there’s money owed on your statement balance, that should be paid straight away before you accrue interest. You don’t have to immediately pay anything if there’s money owed under Current Balance until the billing cycle comes to an end. 

How Do Balances Affect Your Credit?

Besides saving yourself money and keeping yourself out of debt, there’s another important reason why you need to stay up-to-date with your statement and current balances. 

Everything that happens on your credit card gets reported by your bank to various consumer credit bureaus. They use this to calculate your credit utilization ratio (the percentage of the credit available to you that you have used). Keeping this number low is very important as having a low credit utilization ratio can improve your credit score. 

If your credit utilization ratio is low, it shows you’re not high risk and financially responsible, which will get you better deals on loans. 

But which balance gets sent to the credit bureaus? Statement Balance or Current Balance? Unfortunately, this can differ between banks and financial institutions, so if you’re worried about your credit score ask them which they send, and when. To be on the safe side, experts advise it’s better to just pay your full Current Balance whenever you can, or keep your credit utilization ratio under 30%.

When Do You Get Charged Interest?

A credit card can be super handy when you have a big sudden payment to make – but it’s important to not think of the money on your credit card as free money. Instead, you should strive to use your credit card for purchases that you already have the money for in your main checking or savings account.  

As long as you pay off the full amount on your statement by the due date, you’ll avoid incurring interest and only pay for the money you spent. Most banks give their account holders a grace period of 21 days after the date the statement is issued to make a full payment before you start accruing interest. It’s important to note that cash advances don’t have a grace period. 

But not everybody is always able to pay off their credit cards immediately – especially during a stretch of unemployment or financial crisis – and can’t avoid incurring interest. In these scenarios, you should at least try to pay the minimum payment to avoid more penalty fees and blemish your credit rating. 

You can also set up automatic payments – either for the minimum amount or the full statement – that will be deducted from your bank account. This will help you not forget to make the payment. Just make sure a few days before the end of a billing cycle you have enough funds in your account to cover the amount that will be deducted. 

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Conclusion

When it comes to statement balance vs. current balance, which should you use to assess how much to pay when? 

Whether you pay the statement balance in full by the due date or the current balance by the due date, you’ll still be able to avoid interest regardless of which option you choose. 

A happy credit card leads to a happy credit score, which in turn leads to more fruitful financial wellbeing. 

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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