Quick notes:

  • Credit card terminology can be confusing
  • Understanding credit card terms can ultimately help you better manage your money
  • Statement balances can have a more significant impact on how much your credit cards ultimately cost you

You’re one of those people who is on top of your finances, and you don’t ever get behind on your bills. Unfortunately, in the case of credit cards, terminology can stand in the way of understanding what you need to pay and by when.

Two of the most confusing credit card terms are “statement balance” and “current balance.” Sometimes people use these terms interchangeably or fail to understand them accurately. We’ve untangled the details for you so that you know what each term means and what you’re responsible for paying right away.

Defining current balance versus statement balance

Since you’re so on top of paying your credit cards, you’ve probably called the customer service desk or looked up your balance from time to time to see how much you owe. The number that they provide you during these calls is known as your current balance. It indicates how much you owe as of the close of business on the last day before the day that you called.

Alternatively, your statement balance is the total amount of loaned money for any purchases on a card as of the last day of your statement. So, if your statement period finishes on the fifteenth of the month, your statement balance includes all charges that were made from the first day of your statement up until the close of business on that day.


How current balances and statement balances work

How do current balances work as opposed to statement balances? Here’s an example. As in the instance above, if there’s a statement period that closes on the fifteen of the month, the statement balance will include all charges made up until that day. However, if a person calls for their balance midday on the 17th of the month, they will receive the amount of the current balance that includes charges from the statement balance and charges that were made on the 16th. Because it consists of both, it may be slightly higher than the amount listed in their statement balance.

What are cardholders required to pay without incurring interest?

Any interest that cardholders are required to pay is based on their statement balance. The total amount that has been incurred within a single statement period is the amount that monthly minimum payment requirements, interest, fees, and penalties for late or non-payments.

Pay attention to your statement and read it through carefully.

When a cardholder receives their monthly statement, the amounts required, as well as any interest and fees, are all detailed clearly on it. In addition, the dates for the statement period and specific dates and amounts of each charge are also listed on the credit card statement. Pay attention to that statement and read it through carefully. It will help you understand exactly what your credit card activity is and what you need to pay to keep current on your bill.

How to avoid paying some or all of your interest charges

Once you understand the difference between what a current balance and a statement balance is, you’re better prepared to pay less interest each month.

Interest charges on the amounts you charge on your credit card can add up. If you’re looking to avoid paying any interest, pay attention to your statement balance, not your current balance. When you pay your statement balance off in full, either by the date on the statement or within a grace period, you won’t owe any interest. If you pay part of this balance, interest will be charged on the amount that is still unpaid.

A deeper dive – Related reading from the 101:

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