What is a credit card balance?

Understanding the difference between each type of balance on a credit card might be a bit confusing at first. But knowing which balance you’re responsible for paying each billing cycle can help you properly manage your card. It can also help you pay less in credit card interest, fees and other penalties.

Here’s a breakdown of what credit card balances are, where to find them and more.

Key takeaways

  • Pay off the full statement balance by the due date each month to avoid paying interest on your charges.
  • Avoid late fees and other penalties by always paying at least the minimum payment by the due date.
  • Keep tabs on your credit card balance by regularly monitoring your account online or closely checking your credit card statement each month.

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How credit card balances work

A credit card balance is the total amount of money the cardholder owes the credit card company. The many factors that can influence a credit card balance include:

As payments are made, the total balance decreases. When there’s a balance remaining on the account at the end of the billing cycle, interest may be charged on that amount.

How to check your credit card balance

Regularly checking your credit card balance can ensure you know exactly how much you owe and make it easier to spot any unusual activity on your account.

There are a variety of ways to check a credit card balance. Depending on what your issuer offers, you can use your issuer’s mobile app, sign in to your online account or review your paper statements.

Understanding balances on a credit card statement

There will likely be a few balances listed on your credit card statement. This may be confusing at first, but knowing the difference can make card management simpler.

Here’s a breakdown of the most common balances:

Statement balance

A statement balance—also sometimes called a “new balance”—is like a snapshot of a cardholder’s credit card balance at the end of a billing cycle. A statement balance shows how much you owe at the end of one billing cycle, which is typically 20-45 days. It’s the total of all purchases, fees, interest and unpaid balances, minus any payments or credits.

Current balance

The current balance is a snapshot of the total amount that a cardholder owes at the time they check it. Like a statement balance, a current balance is the total of all your purchases, fees, interest and unpaid balances, minus any payments or credits.

Minimum monthly payment

The minimum payment is the amount a creditor requires the cardholder to pay by the due date. On-time payments keep your account in good standing and avoid negatively impacting your payment history

You can make a minimum payment or pay something between the minimum and full statement balance. When you do this, the remainder of your statement balance gets carried or “rolled over” to the next statement. And you’ll typically be charged interest on that balance.

Negative balance

A negative balance on a credit card statement indicates that the credit card company owes the cardholder money. This can happen after returning an item that results in a refund, overpaying your balance or receiving cash back from a cash back credit card.

Should you carry a balance on your credit card?

While it’s always better to pay off a credit card balance in full than to carry a balance, it may not always be possible to do so. Carrying a balance may be a necessity if you can’t afford to pay your bill in full each month. But regularly carrying a balance can be costly. If you have a revolving balance, your purchases can start quickly accruing interest.

The Consumer Financial Protection Bureau (CFPB) recommends paying as much as possible toward your full statement balance. Doing this can help you cover the interest charged while also decreasing the total balance on your card. This all helps you pay off your debt more quickly.

Paying off as much of your balance as you can also helps limit the interest you’ll owe over time. And the less interest you’re charged, the lower your future card payments could be, too.

Does a high credit card balance affect your credit score?

Carrying a credit card balance isn’t just costly. It can affect your credit scores, too.

Credit card issuers typically report your balance information to the credit bureaus after each billing cycle. But the exact timing can be different for each issuer. And because your credit reports show the balance on your card when the issuer reported the information, the amount might be different from your most recent statement balance.

Credit-scoring companies use your credit utilization ratio when calculating your credit scores. And your credit card balance at the time it’s reported to the bureaus can impact this.

Your credit utilization ratio measures how much credit you’re using compared to the amount you have available. According to the CFPB, experts recommend keeping your credit utilization below 30% of your total available credit. 

How to manage high credit card balances

Carrying high credit card balances can be costly—and it could impact your credit scores, especially if you have a high credit utilization ratio. Here are a few strategies that can help you manage high credit card balances: 

  • Consider paying off your debts using the debt avalanche method. With the debt avalanche method, you’ll pay off your debt with the highest annual percentage rate (APR). When you have extra money to do so, you’ll put more than the minimum amount down each month until all of your debts are paid off.
  • Consider a credit card balance transfer. With this type of card, some or all of your outstanding balance can be transferred to a lower-interest-rate credit card. A balance transfer card typically has a low or 0% APR as an introductory offer. If the transferred debt is paid off by the end of the period, you could save a considerable amount on interest. Though there’s typically a fee associated with this.
  • Explore debt consolidation loans. These loans are a type of personal loan that can be used to pay off credit card debt. It can also be a useful tool for consolidating multiple debts into a single monthly payment.

Credit card balances in a nutshell

Understanding and checking your credit card balances can be an important part of managing your finances. It’s a good idea to check your balances regularly, too. That way, you’ll know how much available credit you have and how much you’ll owe at the end of the billing cycle.

You can also monitor your credit to see how your most recently reported balance impacts your scores. CreditWise from Capital One is a free tool that lets you monitor your VantageScore® 3.0 credit score. Using CreditWise to keep an eye on your credit won’t hurt your score. And it’s free for everyone—not just Capital One account holders.

Louis DeNicola, contributing writer

Louis DeNicola is a freelance writer who specializes in consumer credit, finance and fraud. He has several consumer credit-related certifications and works with lenders, publishers, credit bureaus, Fortune 500s and FinTech startups. Outside of work, you can often find Louis at his local climbing gym or cooking up a storm in the kitchen.

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