Understanding Your Credit Card Balance

Your credit card balance, or current account balance, represents the total amount of money you owe your credit card company. It lists every purchase and payment you've made to date, including any unpaid bills from previous months.

Your balance isn't just a number. It's a snapshot of your financial health. Knowing what makes it up, how it moves month to month, and whether your spending habits are healthy can help you make important decisions – like applying for a balance transfer card or increasing your credit limit.

This article explains what your credit card balance is, how to check it, how to pay it off, and much more.

Your credit card balance is the total of what you owe

Your credit card balance (or current account balance) reflects how much money you currently owe your credit card issuer – the bank, credit union, or store that gave you your credit card. It includes every cent you've borrowed (and repaid) so far.

Credit card balance = total money borrowed – total money paid

Your statement balance reflects only the money you borrowed and repaid during your last billing cycle (or billing period), which generally lasts 28 – 31 days. It is included in your credit card balance.

Statement balance = money borrowed during last billing period – money paid during last billing period

Checking your credit card balance

There are 4 ways to check your account to find your official credit card balance:

• By mail: If you haven't gone paperless, check your mailbox for a credit card statement at the end of every billing cycle. Statements show both your current account balance and your last statement balance.
• By phone: Call the number on the back of your credit card and follow the instructions to use your issuer's automated telephone system.
• Online: Log in to your bank's website to check your current balance and statement balance online.
• Via mobile: Nearly every credit card issuer offers an app through which you can check your balance and make payments.

If you're missing a recent transaction, remember it takes 24 – 72 hours (1 – 3 business days) for payments to process.

Beware 3rd-party apps: While some mobile financial apps provide a convenient way to view balances for multiple cards, they require your account details to work and don't update as quickly as official sources.

Paying your credit card balance

The simplest way to stay on top of your credit card balance is to pay off your statement balance in full by the given due date.

Pros of paying your credit card balance:

• You'll avoid interest: If you repay your statement balance during your credit card grace period (the 21 – 55 days between the end of your billing cycle and the payment due date), you won't be charged interest on what you borrowed.
• You'll have more credit available: If you can keep your spending below 30% of your credit card's limit, you'll have more credit available for emergencies and be able to improve your credit score.

Carrying a credit card balance

Letting your grace period expire and missing your payment due date is known as carrying a balance. It adds your statement balance to your total credit card balance, triggering late fees and interest charges.

Credit card interest can inflate the amount you owe by 20% – 30%. To put that into perspective, imagine paying an additional $20 or $30 for a $100 purchase. That's essentially what's happening when you're charged interest on a balance.

Cons of carrying a credit card balance:

• May damage your credit score after 30 days
• May incur late fees
• May revoke your credit card grace period on future purchases
• May trigger penalty interest rates as high as 30%
• Reduces your available credit

If you can't pay off your statement balance in full, consider making the minimum payment plus about $100. Doing so will keep your account in good standing, prevent late fees, and protect your credit score.

What a negative credit card balance means

You might pull up your balance and find it's written as "-$300.00" or "($300.00)". This just means there's a negative balance on your account. No need to panic. You're not in trouble, and it's usually not a big deal since it can be caused by several things:

• You accidentally made an overpayment.
• Your card issuer credited your account for rewards.
• Your card issuer refunded fees or reversed an accidental charge.

Generally, you don't have to do anything about a negative balance. As you keep charging purchases to the card, that negative balance will shrink. If you need the funds back, however, contact your credit card issuer and ask them about returning the funds.

4 things to do if your credit card balance is high

There are 4 different ways to handle a high credit card balance:

• Apply for a balance transfer credit card: Instead of carrying a balance on the same credit card, you could save money by transferring it to a different credit card with a lower interest rate.
• Ask for a credit card limit increase: If you're on top of your debt but consistently hit your credit card's spending limit, consider asking your issuer to increase it.
• Consolidate your debt: A bank or debt consolidation agency can repackage all the money you owe (including your credit card balance) into a single loan with lower monthly payments, interest rates, and repayment periods.
• Make a payment: Paying off your credit card is the best way to minimize interest charges and negative effects on your credit score. Don't just stick with the minimum payment – even an extra $50 will make a difference.

FAQ

What does a balance on a credit card mean?

A credit card balance is just the amount of money you owe your credit card issuer. Your balance can include any purchases you've made, cash advances you've taken, interest charges, and other fees, such as foreign exchange or late payment fees.

What is an outstanding balance on a credit card?

Your current balance is sometimes called an outstanding balance, so don't worry – both mean the same thing. Your balance is the unpaid amount of money you owe the credit card issuer. It includes purchases, fees, cash advances, and interest charged.

How do I check my credit card balance?

There are a few ways to check your credit card balance, including with the paper statement you receive in the mail. Many financial institutions have moved to paperless statements, though. In this case, you can log in to your credit account to see your current balance or even pull it up on your bank's mobile app.

Is it okay to have a credit balance?

It's okay to have a credit card balance sometimes, but ideally you should pay it off in full every month. If you consistently have a balance, especially a high one that's approaching your card's limit, you could damage your credit score. Lenders may think you're struggling with your finances.

What is a negative credit card balance?

A negative credit card balance might sound like a bad thing, but it actually means that you don't owe your credit card issuer money – they owe you. This could be due to a refund or a reversal of charges. Otherwise, you might have accidentally made an overpayment.