Key takeaways

  • While it's easy to understand the concept of owing money on a credit card, your current balance (or outstanding balance) and statement balance are two entirely different figures.
  • But your current balance and statement balance can also be one and the same for a while — particularly within a few days after your billing cycle ends.
  • The best way to avoid credit card debt for the long run involves always tracking your current outstanding balance and paying at least your statement balance in full every month.

Handling credit card debt is a big component of managing your finances, yet there are still a dizzying number of terms to keep track of along the way. For example, credit cards offer a line of credit you can borrow against (known as your credit limit), and you can avoid paying interest on your purchases if you pay your full statement balance on your card within its grace period — which is the amount of time you have to pay your bill between your billing closing date and your payment due date.

But, what is an outstanding balance on a credit card? And when is this figure different from your statement balance? The two terms “outstanding balance” and “statement balance” are often used in place of one another, but they’re not actually the same. Read on to find out what these credit card terms mean and why it matters in the long run.

What is an outstanding balance?

An outstanding balance on a credit card is the amount of money you owe the minute you check your account. This amount includes all charges on your account you have not paid for, including recent purchases you may have just made. Your credit card’s outstanding balance can also include credit card interest and fees that have accrued (if applicable). If you have just made a payment on your credit card, your outstanding balance will also reflect that fact as well, regardless of what your credit card’s statement balance says.

Outstanding balance vs. current balance

Your credit card’s outstanding balance and current balance are essentially the same thing. If you log in to your online credit card account or your credit card company’s mobile app and either one says you currently owe $1,081 on your credit card, that amount is your outstanding balance and current balance.

Outstanding balance vs. statement balance

Your credit card statement balance is totally different. This amount is what your credit card bill shows on the date your billing cycle ends, and it is determined based on the number of purchases and debits made on your account during the typical 28- to 31-day billing cycle. If you made $1,000 in purchases during a billing cycle and your balance was $0 prior to that, for example, your next statement balance would show an amount of $1,000.

That said, your statement balance can also reflect interest charges and fees that accrued during the previous billing period. Your credit card statement balance is also the amount you need to pay in full each billing cycle in order to avoid being charged credit card interest on remaining balances during the following billing period.

How much of your outstanding balance should you pay?

As we mentioned already, paying your full statement balance each billing cycle is how you can avoid being charged interest on purchases made with a credit card. However, you always have the option to pay more than your statement balance and up to your outstanding balance at any given time. Some credit card issuers even let you make overpayments toward your credit card account in order to “pay ahead” for purchases currently pending on your account or ones you plan to make.

There are several benefits to be had when you pay more than your statement balance and up to your credit card’s outstanding balance on a regular basis. For example, keeping up with your spending with regular payments on your card can help you stick to your budget and monthly spending plan. Making regular payments up to your outstanding balance is also a great way to avoid long-term credit card debt or instances where you might wind up spending a lot more than you planned.

What is the average outstanding balance?

Because credit card companies don’t necessarily report outstanding balances to the credit bureaus and only report balances once each month around the date your billing cycle ends, there are no complete data sets on the average outstanding balances on credit cards.

However, recent data from Experian shows the average credit card balance came in at $5,910 for all consumers in 2022. This figure is more than 13 percent higher than in 2021 when consumers had an average credit card balance of $5,221.

How does an outstanding balance affect my credit score?

The outstanding balance on your credit card may or may not impact your credit score in a meaningful way. Ultimately, this is because credit card companies only report your credit card balances to the credit bureaus — Experian, TransUnion and Equifax — once per month at the end of every billing cycle.

This means you could owe $5,000 on your credit card on the 3rd of any given month, pay off your outstanding balance on the 10th of the month and show a $0 credit card balance by the time your credit card billing cycle ends around the 20th of the month in this example.

That said, the credit card balances that are ultimately reported to the credit bureaus do impact your credit score. In fact, amounts owed (also called credit utilization ratio) is the second most important factor that makes up FICO scores at 30 percent.

With this in mind, most experts recommend keeping your credit utilization ratio below 30 percent of your available credit limits for the best results for your credit score. This means making sure your balance reported to the credit bureaus is never more than $3,000 for every $10,000 in available credit limits you have.

The bottom line

Now that you know the difference between your credit card’s outstanding balance and your card’s statement balance, you’re positioned to make informed decisions about your credit and your finances. Your best bet is to make sure you always pay your statement balance in full each month to avoid interest. However, you can also pay extra toward your outstanding balance in order to stay ahead of your spending and avoid long-term debt.