I've already made every imaginable mistake so that you don't have to.

Statement Balance vs. Current Balance


Photo Credit: pexels.com Chevanon Photography

Credit > Credit Cards > Understanding Balances >

Important Disclaimers
  • This page will describe how the term balance is used in the United States in relation to credit cards.
    If you live outside the United States, please perform significant research before assuming that this page is of any relevance to you in your country.
  • In order to bridge the gap between theory and reality, the One Company's Wording section of this page references text on the American Express website.
    This website has no association of any kind with American Express.
    In no way whatsoever does this website speak on behalf of American Express.
  • The table and exercises on this page will assume that you are paying your full statement balance on or by the payment due date regardless of whether there might only be a much lower minimum payment amount due.
    In a given month it is possible that you may experience some very specific scenario where just paying the minimum balance may be a responsible decision for you.
    However, if you find yourself routinely paying only the minimum amount due then you have a problem that you need to address.

This page will explain the difference between a credit card's statement balance and a credit card's current balance.
The concept of the issuer of a card calculating a statement balance as described on this page applies to:

The concept of calculating a statement balance as described on this page does NOT apply to:

With debit cards, money is deducted from an underlying deposit account as purchases are made.
With gift cards, money is deducted from the gift card's balance as you make purchases.
My goal with this page is that after going through the exercises you will be baffled as to how so many people have difficulty understanding the difference between statement balance and current balance ... even though you may have already forgotten that you yourself were not completely sure not so many minutes ago.
Just reading this one web page and working through the 6 exercises will not make you an expert on all things related to credit cards, but it will make you more knowledgeable than a great many people.

Statement Balance versus Current Balance

Within the field of personal finance, it is important to understand how adjacent words can impact the meaning of the word balance.

After creating the bullets above I searched the internet for additional permutations.
On the page on the American Express website listed below you will see following bullets:
https://www.americanexpress.com/us/customer-service/faq.balance-details.html

  • Statement Balance is the 'New Balance' that appeared on your most recent billing statement.
  • Remaining Statement Balance is your 'New Balance' adjusted for payments, returned payments, applicable credits and amounts under dispute since your last statement closing date.
  • Total Balance is the full balance on your account, including transactions since your last closing date. It also includes amounts under dispute. Activity in the last 24 hours may not be reflected. For more information, click the information icon next to each balance.

The American Express definition of Statement Balance maps nicely to the definition listed several lines above it this web page.
The American Express definition of Total Balance maps to my definition of Current Balance.
Remaining Statement Balance appears to be something in between.
What stands out to me as a difference between the American Express definitions of Remaining Statement Balance and Total Balance is that Remaining Statement Balance does not include new purchases.

Carrying A Balance

Carrying a balance is when you have not paid your statement balance in full by your payment due date.
Carrying a balance is not a synonym for being delinquent.
As long as you have made your minimum payment by its due date, then you are not delinquent.
It is not merely possible but rather completely normal to have a positive current balance but not be carrying a balance if you have been paying your credit card's statement balance off by its due date.

Balance Exercises

On January 15, 2023 Alice opened a new credit card account.
The table below lists the events for that new credit card account during the period displayed.
The formatting of my table may differ from what your statement looks like.
Using a table listing just:

I was able to create six exercises with which you can test your knowledge.
Leveraging the table below I could have created even more exercises.
However, there is a difficult balance between providing sufficient exercises with which to test different scenarios and providing so many exercises that readers decide to nope right out at first glance.
For some readers, the six exercises that I have provided might be insufficient to test their favorite scenarios but for others six exercises may already be seven exercises too many.

DateActionAmount
January 15, 2023Account Opened
Credit Limit Assigned
Account opening and credit limit being assigned are all that this row is intended to indicate.
$1,500.00
January 21, 2023Purchase$172.54
February 3, 2023Purchase$64.34
February 14, 2023Closing Date
For First
Statement,
Payment Due By
March 7, 2023
See Exercise
February 20, 2023Purchase$36.45
March 4, 2023PaymentFull
Statement Balance
Calculated as of the last instant of February 14, 2023

For the exercises to follow the table, there are no transactions other than what is shown on the table.
Exercise 1
As of January 17, 2023 what is the current balance of Alice's account?
A) ‚Äč$0
B) $172.54
C) $64.34
D) $1,500.00


The answer to Exercise 1 is A).
The first purchase in the table is on January 21, 2023.
January 17, 2023 is before January 21, 2023.
Alice's current balance on January 17, 2023 is $0.

DateActionAmount
January 15, 2023Account Opened
Credit Limit Assigned
Account opening and credit limit being assigned are all that this row is intended to indicate.
$1,500.00
January 17, 2023Current Balance$0.00


Exercise 2
As of January 23, 2023 what is the current balance on Alice's account?
A) $0
B) $172.54
C) $64.34
D) $1,500.00


The answer to Exercise 2 is B).
Through January 23, 2023 the only purchase or payment in the table is a purchase of $172.54.

DateActionAmount
January 15, 2023Account Opened
Credit Limit Assigned
Account opening and credit limit being assigned are all that this row is intended to indicate.
$1,500.00
January 21, 2023Purchase$172.54
January 23, 2023Current Balance$172.54


Exercise 3
As of February 5, 2023 what is the current balance on Alice's account?
A) $172.54
B) $236.88
C) $64.34
D) $1,500.00


The answer to Exercise 3 is B).
As of February 5, 2023 Alice's account shows a purchase of $172.54 and a purchase of $64.34 for a total of $236.88.

DateActionAmount
January 15, 2023Account Opened
Credit Limit Assigned
Account opening and credit limit being assigned are all that this row is intended to indicate.
$1,500.00
January 21, 2023Purchase$172.54
February 3, 2023Purchase$64.34
February 5, 2023Current Balance$236.88


Exercise 4
When the issuer of Alice's credit card creates her first statement, what will her statement balance be?
A) $172.54
B) $64.34
C) $236.88
D) $1,500.00


The answer to Exercise 4 is C).
There were no additional entries in the table since we calculated the current balance in the previous exercise.
It will not always be the case, but in this particular case Alice's current balance and her statement balance are the same.
A credit card statement will have a minimum due amount and a statement balance amount.
The minimum due amount might be dramatically lower than the statement balance.
According to the table, the statement balance is the amount that Alice will use for her payment.
Alice has made a conscious decision to be responsible by paying her statement balance each month.

DateActionAmount
January 15, 2023Account Opened
Credit Limit Assigned
Account opening and credit limit being assigned are all that this row is intended to indicate.
$1,500.00
January 21, 2023Purchase$172.54
February 3, 2023Purchase$64.34
February 14, 2023Closing Date
For First
Statement,
Payment Due By
March 7, 2023
$236.88


Exercise 5
As of February 25, 2023 what is the current balance on Alice's account?
A) $64.34
B) $172.54
C) $236.88
D) $273.33


The answer to Exercise 6 is D).
The previous 2 exercises we calculated the current balance and statement balance of Alice's account.
In those particular exercises, the current balance and the statement balance were the same.
That will not always be the case, as we are about to see.
On February 25, 2023 Alice's current balance is $273.33.
In the line above and in the table below I said February 25, 2023 because that was what the question stated.
Alice's current balance would have been the same $273.33 until her payment was made on March 4, 2023.

DateActionAmount
January 15, 2023Account Opened
Credit Limit Assigned
Account opening and credit limit being assigned are all that this row is intended to indicate.
$1,500.00
January 21, 2023Purchase$172.54
February 3, 2023Purchase$64.34
February 14, 2023Statement Close$236.88
February 20, 2023Purchase$36.45
February 25, 2023Current Balance$273.33


Exercise 6
After Alice's payment made on March 4, 2023 has posted, what will be her current balance?
The account has no other activities other than what is in the table preceding the exercises.
A) $36.45
B) $172.54
C) $236.88
D) $273.33


The answer to Exercise 7 is A).
There are two different ways I see for approaching this particular exercise.
You will maximize your understanding if you understand both ways I present this answer.
While there may be an easy way and a hard way for the specific scenario I am presenting, in your life you may have scenarios I cannot anticipate.
The Easy Way
The easy way is to see that:

  1. Alice's statement balance was a calculated,
  2. Alice then made a purchase,
  3. then Alice paid her statement balance.

DateActionAmount
February 14, 2023Statement Balance$X
February 20, 2023Purchase$36.45
March 4, 2023Payment$X
Current Balance$36.45

$X + $36.45 - $X = $36.45 even if we do not know what the value of X is.

The Hard Way
Add up the purchases and subtract the payments to get the current balance:

DateActionAmount
January 21, 2023Purchase$172.54
February 3, 2023Purchase$64.34
February 20, 2023Purchase$36.45
Current Balance$273.33
March 4, 2023Payment$236.88
Current Balance$36.45


Exercise Summary

Due Date
Alice's first payment was due on or by March 7, 2023.
There may be an important time and time zone cutoff as well.
Alice decided to make her payment on March 4, 2023 on her credit card issuer's site.
Making the payment that way, she is pulling her payment from her checking account to her credit card account.
If Alice had instead made the payment using her checking account's web page then she would be pushing the payment from her checking account to her credit card account.
If Alice is making her payment other than by using her credit card online account to pull money then she needs to be careful to leave however much time is needed for her payment to arrive at her credit card company.
The above statements presume that Alice has different banks for her checking account and her credit card account.
I have not seen your particular online account, so I have no idea whether there is some scenario where even if you have the same bank for your credit card and checking account there would be a way for the payment to somehow be late if you entered the payment on time but on the wrong screen.
Amount Due
Note that the purchase shown on February 20, 2023 does not impact the payment due on or by March 7, 2023.

My Takeaway

This page progressed from an introduction, to some definitions, to 6 exercises testing your knowledge.
The intent of the multiple choice format exercises was to provide an easy way for you to test your understanding of this material.
On the following page we will be taking two steps forward and one step back.
The two steps forward will be to include more statement cycles.
The one step back will be to make the statement open and statement close dates align with month begin and month end dates.
Having statements line up on calendar months is not realistic, but it does make presenting multiple statement cycle easier.