Credit card statement balance vs. current balance

If you use your credit card for day-to-day purchases, your statement balance will likely be different from your current balance. There’s a good reason for this.

Your statement balance is a snapshot of all the expenses and payments that were made to your account during one billing cycle. Once your statement balance is generated, it won’t change until your next billing cycle ends — but that doesn’t mean your credit card balance won’t change. As you continue to use your card, you’ll see your current balance — the current total of all charges and payments to your account — increase until you make a payment.

• Why is my statement balance more than my current balance?
• Should I pay my statement balance or current balance?
• How your current balance affects credit utilization rate?

Why is my statement balance more than my current balance?

Your statement balance is more than your current balance because your current balance reflects the current total of all charges and payments to your account — and that changes every time a transaction occurs. If you’ve made a few purchases since your statement closing date (the date that one billing cycle closes and after which the next begins), then your current balance will be higher than your statement balance.

On the other hand, if you’ve made a payment since your statement closing date and haven’t made any other transactions, then your current balance will likely be lower than your statement balance.

Paying your statement balance in full before or by its due date can help you save money on interest charges. Alternately, paying your current balance in full by its deadline can improve your credit utilization ratio and your credit health.

Should I pay my statement balance or current balance?

Generally, you should prioritize paying off your statement balance. As long as you consistently pay off your statement balance in full by its due date each billing cycle, you’ll avoid having to pay interest charges on your credit card bill. This is why you should strive to pay off each billing cycle’s statement balance by the due date whenever possible.

That said, if you can’t afford to pay off your entire credit card statement balance by the due date, and there are a lot of very good reasons why that might be the case, then prioritize paying your minimum payment. You’ll accrue interest as a result, but making at least your minimum payment on time will help you avoid late fees and negative marks on your credit reports.

Credit card issuers aren’t required to offer grace periods, but if an issuer chooses to, it must give customers a grace period of at least 21 days from mailing or delivering a customer’s statement to allow them to pay off the statement balance listed with no added interest charges. Take a look at your credit card issuer’s terms and services to see if it offers anything like this.

Some transactions, like cash advances, do not fall under the same “grace period” rules that typically apply to purchases. Instead, they begin accruing interest the moment you take one out.

So if you’ve recently taken out a cash advance on your credit card, we suggest paying it off as soon as possible, regardless of whether you’ve received your statement yet.

Using automatic payments to avoid interest charges

The advent of online billing and payment options has made it possible for many credit card issuers to offer automatic payments to their customers.

Check with your credit card issuer to see if autopay is available. If so, there’s a good chance that you’ll be able to select “statement balance” as your automatic payment choice.

Autopay could help you stay on top of your bills and avoid late payments and interest charges on your purchases. It’s also a good idea to set a reminder on your calendar a few days before your payment date to make sure there are enough funds in your bank account to process the payment.

How your current balance affects credit utilization ratio

Depending on how your credit card issuer reports your account balances to the consumer credit bureaus, your current balance could affect your credit utilization ratio.

Your credit utilization rate is simply how much of your available credit you’re using at any given time, which can affect your credit scores. Generally, the lower your credit utilization rate, the better.

Credit bureaus calculate credit utilization rates off the balances that they receive from credit card issuers. Many issuers report their cardholders’ statement balances, but some may send current balances instead.

If you’re worried about this, check with your credit card issuer to find out which balance it reports to the credit bureaus. If your issuer happens to report current balances instead of statement balances, ask which day of the month that it reports.

If you’re ever worried about your credit utilization rate being too high, aim to pay down your current balance whenever possible. A good goal is a current balance below 30% of your total credit limit.

Next steps

When it comes to the question of whether you should pay your credit card statement balance or current balance each month, it really boils down to personal preference and financial goals.

With either choice, you’ll avoid the interest charges that come with only making minimum payments on your credit card purchases. Plus, you’ll drive down your credit utilization ratio, which may help your credit health. Either way, remaining consistent with on-time payments is key — your payment history is a major factor in your credit scores.