Statement Balance Vs. Current Balance: The Difference And Why It Matters (2024)

What Is a Statement Balance?

Your statement balance is an overview of all purchases and payments made during one billing cycle. Every credit card has a billing cycle—which can vary among card issuers. You can check your billing cycle details in your cardholder agreement to be sure but a typical billing cycle is around 30 days.

In most cases, your due date won’t be aligned with the 1st or 30th of each month. This might cause some confusion if you plan your budget to coincide with the beginning and end of every month.

Whenever your billing cycle ends, your credit card bill (yourstatement) is generated. Once your statement is generated, your statement balance doesn’t change until your next billing cycle closes.

What Does Current Balance Mean?

Unlike your statement balance which represents the purchases and payments on your card during a set period, your current balance reflects all the charges and payment activity on your credit card account up to the date the statement was generated.

Your current balance is not fixed the same way as your statement balance. Your current balance updates every time you use your credit card and gives you a better representation of the total amount you owe on your credit card at any given time.

Depending on the way you use your credit cards, when you make payments and how often you check your account balance overview, your current balance and your statement balance might be different.

This is because your current balance continuously updates according to your account activity to show you purchases, payment deposits and interest even after your current billing cycle has closed.

If you’ve made a purchase since your last billing cycle closed, go online to check your account and you’ll see your current balance is higher than your statement balance.

For example, if your card’s billing cycle is between the 1st and 28th of the month and during that time you spent $1,000 on purchases, your statement balance as of the 28th will be $1,000. If then you make an additional purchase of $500 on the card on the 29th of the month, your statement balance will still be $1,000, and your current balance will be $1,500 because the additional $500 was made after your billing cycle closed.

The inverse is also true: if you made a payment after your billing cycle ended and did not make any other purchases, it’s likely your current balance would be lower than your statement balance.

Which balance should be paid each month depends on a person’s financial goals and situation, but generally, it’s wise to pay off the statement balance every month so you do not incur fees and interest.

Any amount not paid on your statement balance by the due date will roll over into the next month and start to accrue interest and, depending on the credit card agreement, possibly finance fees.

Of course, paying your statement balance in full might not always be possible every month—and that’s okay, it is after all one of the ways the credit card company makes money—but you should always aim to make at least yourminimum paymenton time in order to preserve your credit score and avoid late fees.

You can set upautomatic bill payto allow your credit card issuer to withdraw the minimum payment amount from your bank each month to avoid missing or making a late payment; both of which can negatively impact your credit score.

If you end up having additional money to put toward your credit card bill at a later date, you can always make an additional payment.

Each month, typically at the end of the billing cycle, your credit usage will be reported by your credit card issuer to theConsumer Credit Bureaus. While it’s common that issuers report statement balances, some issuers may send the current balance instead. You can check with your credit card issuer to find out which balance is being reported and when.

Based on the balances received from your credit card issuer, the Credit Bureaus will calculate yourcredit utilization rate: the percentage of your total available credit you’re using at any given time.

Your credit utilization rate is one of the most important factors in yourcredit score, which means it can impact your approval odds for new credit cards as well as your ability to access better interest rates and higher credit limits. You can expect your credit score to be consulted whenever you want to finance a large purchase such as a home or car.

Simply put, the lower the credit utilization rate, the better, but if you’re wondering what exactly is a low credit utilization rate, under theFICO ScoreandVantageScorecredit scoring models, a current balance below 30% of your total credit limit is a good benchmark.

The decision to pay your statement balance in full or pay your current balance each month will ultimately depend on your financial preferences. Paying your current balance early—that is before it becomes part of your statement balance—is wise if you are planning to travel or otherwise be out of communication so you don’t have to worry about missing a payment. But it won’t cost you anything to let it build up until your next statement, just so long as you pay your statement balance on time in full every month.

The key is to understand the difference between the two balances so that you can make the best decisions to better manage your debt, reach your financial goals and get the most value from your credit cards.