Statement Balance vs. Current Balance: What’s the Difference on Your Credit Card?

Every month, you get an account statement for each credit card you hold, which details all the activity on the card during the billing cycle. On that statement, you'll see exactly how much you owed at the time the statement was generated. That's your statement balance, and it's usually the most prominent number on the statement.

But the statement balance might not reflect how much you owe on the card right now. In the days since that statement was generated, you might have put more purchases on the card, or you might have returned a purchase for reimbursement to the card, or you might have made a payment. The amount you owe right now is called your current balance (sometimes referred to as "outstanding balance"). When you log onto your card account online or check the card issuer's app, it's the current balance that's displayed most prominently.

Sometimes these numbers are the same; often they're different. Here's the difference between your credit card statement balance and current balance.

» LEARN: How to read your credit card statement

What is the statement balance?

Issuers are required by law to provide monthly statements to their cardholders. These can be sent by mail or, if you go paperless, accessed online.

Each statement lists all the activity in one billing cycle, which is usually a period of 28 to 31 days. After the last day of the billing cycle, known as the credit card closing date, the issuer calculates your statement balance like this:

• Opening balance: If you didn't pay your bill in full the previous month, the issuer starts with whatever debt was carried over to this cycle. If you did pay in full, the opening balance is $0.

• Transactions: The issuer tallies up all the purchases charged to the card, all cash advances taken from the card, and all transferred balances added to the card in the cycle. It then adds the total to the opening balance.

• Payments: Any payments you made during the billing cycle are subtracted from the balance.

• Interest and fees: Finally, any interest that accrued during the billing cycle is tacked on, as are any fees you may have incurred, such as a late fee or a cash advance fees.

The result is the total of all transactions minus any payments you made during that billing cycle.

Here’s an example resulting in a statement balance of $4,250:

• You've been paying your bill in full each month, so you have a $0 opening balance and are not being charged interest.

• You charged $1,000 worth of various expenses throughout the billing cycle to your credit card.

• You completed a $5,000 balance transfer to that same credit card. Your card assesses a 5% balance transfer fee on the loan amount, adding $250 to your credit card’s ledger.

• You made a $2,000 payment toward the credit card around the middle of the billing cycle.

A $0 starting balance plus $6,250 in transactions and fees minus a $2,000 payment equals a statement balance of $4,250.

What is the current balance?

As the name suggests, a current balance on a credit card refers to the total amount owed at the time you check your account. Thus, the current balance may be a more up-to-date reflection of your financial position than the statement balance.

Say your billing period ended a week ago and your statement shows a balance of $1,300. You haven't used the card since then and you check your account in the issuer's app. Your current balance is $1,300, since nothing has happened since the statement was generated. Statement balance and current balance are both $1,300.

Now say you put lunch on your card for $20. Tomorrow you check your account in the app again, and you see that your current balance is $1,320. Your statement balance is still $1,300, however. That matters, because when it comes time to pay, the statement balance is more important.

Should you pay the statement balance or current balance?

If you pay the statement balance by the due date, your bill is considered paid in full. Paying in full each month ensures that you will have a grace period on purchases. That means no interest will be charged on purchases until after your next due date. With most credit cards, people who always pay in full will never be charged interest because they always have that grace period in effect.

If your current balance is higher than your statement balance when you go to pay your bill, which should you pay? There are benefits to both, and it depends on your preference:

• Paying the current balance fully zeroes out your debt. In one fell swoop, you’ll pay off whatever your statement balance was plus any extra charges you made since the previous monthly statement was issued. On the plus side, you've covered all your expenses, and your credit card's interest rate never becomes a factor. On the minus side, you may find yourself less liquid in the short term.

• Paying the statement balance lets you "float" charges. Paying only the statement balance still lets you dodge interest until the next billing cycle. On the plus side, you keep more cash on hand and have more time to finance your purchases, thanks to your grace period. On the minus side, in the example above, you'll have a bigger bill coming due eventually. So this method, too, requires some budgeting and care.