When you receive your credit card bill, you’ll notice two different balances: the statement balance and the current balance.
Conventional wisdom says that you should always pay off your statement balance within your grace period to avoid paying interest, but in contrast, we hear very little about the current balance.
If your goal is to understand your billing cycle better and learn more about how your credit utilization rate affects your credit score, it’s helpful to break down exactly how the two amounts differ.
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Statement balance vs. current balance
Both statement and current balances operate around a billing cycle. A billing cycle is the length of time, typically 28 to 31 days, between your last statement closing date and the next.
Statement balance
A statement balance is the sum of your transactions from your last billing cycle, plus and fees or interest. This is generated on the last day of your billing cycle and will include your minimum required payment and due date. Since it’s looking at a specific period of past spending, your statement balance doesn’t change until the end of the next billing cycle, when you will get a new statement.
You must pay your statement balance in full before the due date to avoid any interest fees.
Current balance
The current balance is a running tracker of how much you owe on your card at any given time. This means that, unlike a statement balance, it will change depending on your spending.
For example, let’s say you spent $500 during a billing cycle, and another $50 after your cycle ends. When you receive your credit card statement, your statement balance will be listed as $500. And if you check your online account, your current balance will be $550. Then, if you make a $500 payment, your statement balance will be paid off, leaving you with a $50 current balance.
How balances affect your credit score
Credit card issuers typically report your statement balance to the credit bureaus monthly, but if you have multiple cards with different issuers, you’ll likely have credit card balances reported at various times throughout the month. While most card issuers report your statement balance instead of your current balance, you should double-check by calling or messaging your card issuer about which balance they report.
The balance reported to the credit bureaus appears on your credit report and can affect your credit utilization rate, which is the percentage of the total credit you’re using. The higher your balance, the higher your credit utilization rate, which can lower your credit score.
There are a number of credit monitoring services that make it easy to track your credit report. Experian IdentityWorks offers a basic plan at no cost, plus free trials for its premium options. The free plan offers some basic credit monitoring tools and alerts, while the paid plans include features like identity theft insurance and fraud resolution support.
Experian IdentityWorks℠
On Experian’s secure site
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Cost
Basic: Free; Premium: 7-day trial, after $24.99 per month; Family: 7-day trial, after $34.99 per month
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Credit bureaus monitored
1-bureau credit monitoring, alerts and reports: Experian, with Basic plan only and 3-bureau credit monitoring, alerts and reports: Experian, Equifax and TransUnion®, with Premium and Family plans only
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Credit scoring model used
FICO® Score 8, with all plans
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Dark web scan
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Identity theft insurance
Yes, up to $1 million with all plans
*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.
To find your credit utilization rate, a significant credit score factor, divide your total balance by your credit limit. For example, if you have one credit card with a $1,000 balance and $5,000 credit limit, your utilization would be 20%.
Here’s the math: $1,000 / $5,000 = 0.2 x 100 = 20%
To maintain a low credit utilization rate, consider reducing your spending or making periodic bill payments throughout your billing cycle so you have a lower statement balance. The lower your statement balance, the lower your credit utilization rate, which can improve your credit score.
Should I pay my statement balance or current balance?
To have your account reported as current to the major credit bureaus (Experian, Equifax and TransUnion) and avoid late fees, you’ll need to make at least the minimum payment on your account. But to avoid interest charges, you’ll need to pay your statement balance in full.
If you pay less than the statement balance, your account will still be in good standing, but you will incur interest charges. You can avoid paying interest temporarily with an intro 0% APR card, like the Wells Fargo Active Cash® Card or the Citi Simplicity® Card. The Wells Fargo Active Cash has a 0% APR for 12 months (then, a 19.74%, 24.74%, or 29.74% variable APR) and the Simplicity Card offers a 0% APR for 21 months (after that, a 18.49% – 29.24% variable APR applies).
Wells Fargo Active Cash® Card
On Wells Fargo’s secure site
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Rewards
Unlimited 2% cash rewards on purchases
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Welcome bonus
Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months
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Annual fee
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Intro APR
0% intro APR for 12 months from account opening on purchases and qualifying balance transfers.
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Regular APR
19.49%, 24.49%, or 29.49% Variable APR
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Balance transfer fee
Intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
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Foreign transaction fee
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Credit needed
Citi Simplicity® Card
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Rewards
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Welcome bonus
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Annual fee
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Intro APR
0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening.
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Regular APR
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Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
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Foreign transaction fee
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Credit needed
FAQs
Should I pay my statement balance or current balance?
You should always try your best to pay your statement balance in full to avoid fees and interest, your current balance shows your recent spending.
Will paying my statement balance help avoid interest?
Yes, paying your full statement balance by the specified due date means you will not be charged interest for interest for that period.
What happens if I overpay my credit card?
There is no penalty for overpaying your credit card. If you overpay, you’ll receive a statement credit to use toward future purchases. If you overpaid by a large amount, you can request a refund from your bank.
Should I pay by the statement date or due date?
You should pay your statement balance by the due date listed. The statement date typically marks the ending of your billing cycle, but not a payment date.
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