If you check your credit card balance by phone or online, you can be presented with two different balances: a balance statement and a current balance. These scales can be different, which can be confusing, especially if you try to avoid paying the balance in full to avoid paying financing costs. What is the exact balance? Which one should you pay for?
What balance appears on your credit card statement?
The invoice amount is the balance that was printed on the latest credit card statement. It’s your credit card balance as of your bank statement as of the deadline, the date, your billing cycle ended and your credit card statement was generated.
It is not uncommon for this balance from your current account balance to be different.
The remaining amount that appears on your credit card statement is often the balance that is reported to the credit bureaus. This explains why the credit on your credit report often doesn’t reflect your current credit card balance.
Why Your Credit May Be Different
Your credit card activity is billed in cycles. When a billing cycle ends, the credit card company prints a statement detailing the activity that occurred during that billing cycle and notifying you of the payment due and due date.
Since the timesheet was printed from your credit card, you may have made purchases, payments, or other transactions that alter your outstanding credit card balance. These transactions are reflected in the current balance. The current balance could be higher or lower than the invoice amount, depending on the transactions you made. For example, if a payment is posted to your account because your statement has been printed, your invoice amount will be higher than your current balance. Or, if you made purchases since the billing cycle was printed, your invoice amount will be lower than your current balance.
If you check your account online or over the phone, your current account balance may include pending transactions. These are transactions that you have made, usually within the past 24 to 48 hours, that have not yet been posted to your account. Your credit card issuer has received notification of these transactions, but they have not been fully processed.
What balance to pay to avoid interest charges
To avoid paying financing costs on a scale, you usually need to have the settlement period started with a $ 0 balance or at least paid your previous balance in full before the end of the grace period. The invoice amount you already see will include a financing cost if a balance is made from the previous billing cycle. Otherwise you have to pay the balance in full by the end of the grace period and avoid receiving any financing costs on this balance.
To ensure that your invoice amount is paid on time every month, you can set up an autopay with your credit card company. You will automatically specify the payment from your bank account on the draft date (it should be on or before the due date).
If you set up automatic payment, you should have enough funds in your checking account. Otherwise, if your bank refuses to pay, you will be charged a repayment fee and you will end up paying financing costs because the balance was not fully paid at the due date.
You will be left with a credit on your credit card if you balance the full statement and your current account balance is payable higher than this amount. You will see leftover balance as well as all new transactions on your next statement.
Paying the full current balance is also fine, especially if you want a low or zero balance on your next credit card statement. If you want to withdraw your funds down to zero, contact credit card companies to find out the “Withdrawal Balance”, which may include financing costs that have not yet been added to your account.
If you cannot afford to pay the full invoice amount, you must pay at least the minimum penalty to avoid receiving a late payment. Or pay more than the minimum if you can afford to decrease your credit card balance faster and reduce the amount of interest you pay over time.