If you use a credit card for your online or day to day purchases, then you must know the Difference between Statement Balance and Current Balance. You have to pay your balance in order to avoid interest.
There are many people who do not know the difference between the two so they end up in trouble with the bank later. Both of these are actually different and represent different amounts.
Statement Balance: Definition and Examples.
The statement balance on your credit card is the main balance. This is the amount that you are owing to the bank. In order to avoid interest, you should pay your statement balance before the due date. Paying this balance also saves you from penalty fees.
You will notice a difference in your statement balance as you spend. There is a billing cycle for your credit card so you must make sure to pay the statement balance before the next billing cycle. In this way, you will be able to avoid any interest.
If you are unable to pay your statement balance fully, you should try to make the minimum payment. When you do this, you will still have to pay interest. However, this will save you from late fees and there will be no negative impact on your credit score.
If you want to have a good credit score, you must pay the statement balance before the due date of each billing cycle.
Current Balance: Definition and Examples.
The current balance on your credit card changes daily. As you spend money, the amount changes. If you spend more, the amount will increase on your card and if you pay the previous bills, the number will go down. So, this is actually the current balance that is one your credit card.
Most people do not notice a Difference Between Statement Balance and Current Balance. This is because they only check their bill at the end of the month. This is when both amounts are the same.
However, if you check your amount during the month, the current balance will be higher than your statement balance. This happens when you have not repaid the previous amount and you are spending more.
For example, if the statement balance on your credit card is $400 at the end of a billing cycle, your current balance will be the same. The next day, you spend $50 on an online purchase.
Now, your current balance will be $430 but your statement balance will still be $400. It will only change at the end of the current billing cycle.
Summary of Difference Between Statement Balance and Current Balance:
- The Difference Between Statement Balance and Current Balance is that current balance is the balance on your credit card at that time and statement balance is the balance at the end of the billing month.
- If you have not repaid for the previous cycle, the current balance can be higher than your statement balance.
- You must pay your statement balance in order to avoid paying interest and late fees.