What Is an Outstanding Balance on a Credit Card?

When it comes to borrowed money, your "balance" is the amount you owe. With credit cards, though, there can be several ways to express that balance — outstanding balance, statement balance and negative balance, just to name a few

The outstanding balance on a credit card is the total amount you owe at the moment you check your account. Here’s what that means and why it matters when it comes time to pay your credit card bill.

» LEARN: How to read your credit card statement

Outstanding balance = current balance

Your outstanding balance is the balance on your account right now.

If you use your credit card regularly, the outstanding balance is continually rising and falling. Every purchase you make adds to the outstanding balance. Same with cash advances and balance transfers, as well as issuer fees and interest. Meanwhile, every payment you make on your credit card reduces your outstanding balance. When you check your account online or in your issuer's app, the outstanding balance is the number you see displayed most prominently. That's what you owe at this moment.

Also known as the "current balance," the outstanding balance can change daily. It may be $500 when you log into the credit card’s app in the morning, but then a $50 purchase posts to the account at midday, and your outstanding balance rises to $550 (even if the $50 purchase is still showing as pending).

For the most up-to-date number of how much you owe the card issuer, check your outstanding balance.

Outstanding balance vs. statement balance?

While the outstanding balance is the total amount you currently owe on the card, there's a different number that's just as important: your statement balance. The statement balance is a "snapshot" that tells you how much you owed when your last billing cycle ended and your monthly statement was generated. The billing cycle is the roughly one month period covered by each account statement.

If you haven't used your card or made any payments since your statement was generated, your outstanding balance may be equal to the statement balance. But any activity since the then will change your outstanding balance, and the numbers will be different.

» MORE: Statement balance vs. current balance: What's the difference?

Should you pay the outstanding balance?

The difference between outstanding balance and statement balance becomes important when paying your bill. For your account to be considered "paid in full," you must pay the statement balance on your account by the due date. Paying in full is ideal because when you do so every month, you have a grace period in effect, which means you can avoid paying interest on your purchases.

When you go to pay your bill, your outstanding balance might be higher than your statement balance. You don't have to pay the outstanding balance; you can keep your grace period going just by paying the statement balance. But it's still an excellent option if you can afford to do so. You’ll have your credit card completely paid off, and you'll knock down your utilization ratio, which is the percentage of total available credit in use at one time. Credit scoring formulas reward lower utilization, so if you're planning to apply for new credit soon, low utilization can benefit you.