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What is a credit card balance?

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When you read your credit card statement, one of the most important lines to take note of is your balance. Keeping track of your balance is essential for managing your credit card usage and paying off your debt.

What is a credit card balance?

A credit card balance is the amount of money you owe your credit card company. The charges you’ve made to the card and cash advances you’ve taken all add to your balance. So do interest and fees the credit card company charges you.

If you transfer a balance from another account, the amount that you’re transferring plus any fees get added to your card’s balance.

Your balance changes as you use your card. Putting a purchase on your card causes your balance to go up while paying your credit card bill makes the balance go down.

Statement balance vs. current balance

When you log into your credit card account online or through a mobile app, you’ll likely see two balances: a statement balance and the current balance.

Your credit card company creates a statement for your account regularly—typically once a month. The statement lists all the charges made on your account since the last statement, as well as any interest or fees you incurred during that time. It also lists any payments or credits that were made to your account.

The statement includes a statement balance, which is the amount you owed the credit card company when the statement was created.

Your current balance is the amount you owe right now. It may be different from the statement balance if you’ve made a purchase with the card, taken a cash advance, transferred a balance, made a payment or if you’ve been charged fees or interest since your most recent statement.

What does it mean to carry a balance?

If you don’t pay the full amount of your balance by the statement due date, the amount you still owe carries over to the next billing cycle. You’re usually charged interest when this happens. Then, when your next statement is created, you owe the amount that carried over along with the interest, as well as any new charges.

What is a negative credit card balance?

If your balance is a negative number, the credit card company owes you money. This can happen if you get a refund for a purchase or if the credit card company applies a statement credit, such as cash back from a rewards program, to your account. Paying the credit card company more than the current amount you owe can also result in your balance being less than zero.

A negative balance means you can charge more than your limit to your credit card. For example, if you had a balance of -$100 and your credit limit is $2,500, you’d technically be able to charge $2,600 (although maxing out your card is never a good idea). Your account would then show a balance of $2,500. The limit your credit card company set for the card wouldn’t change, though. In this case, once you have a positive balance again, your limit will still be $2,500.

You can ask your credit card company to write you a check for a negative balance or to deposit the money it owes you in your bank account. Alternatively, you can just continue to make charges to the card, which will offset the negative balance.

How to check your credit card balance

You can also find your balance through your account on the credit card issuer’s website or with its mobile app. If you haven’t managed your account online before, you’ll need to set up a username and password. If you already have login details, just enter them when prompted. You’ll be able to view your current balance and recent activity on the card.

You can check your credit card balance by phone; find the phone number on your credit card or statement. Be ready to provide information about your account and to verify your identity. You’ll be able to choose from a menu of options, one of which typically is to hear your current balance and other account details.

You can also see your balance on your credit card statement in the mail. However, keep in mind that this won’t necessarily reflect your current balance but your balance when the statement was created.

It’s easy to forget to check your balance regularly, but automatic notifications can help you keep track of it. On your credit card company’s website or app, select alerts or notifications. Generally, you can choose from email, text or push notifications to tell you what your balance is each week or to let you know when your balance is close to your credit limit.

Why you should pay your balance in full (and how to do it)

Carrying a balance means you’ll pay interest

Carrying a balance usually isn’t a good idea. For one thing, it can be expensive. Credit card companies often give you a grace period during which you aren’t charged interest on purchases. You have until your payment is due to pay your full balance and avoid being charged interest. This is called your grace period. If you don’t pay the entire balance by the due date, you’ll start incurring interest on the portion you didn’t pay. And depending on your card’s terms, you might also lose the grace period for the next several months and get charged interest for each purchase immediately after the end of that billing cycle.

You don’t need to carry a balance to build credit

You may have heard a claim that carrying a small balance every month will improve your credit score. This isn’t true. Paying your credit card bill on time is good for your credit score, and there isn’t any advantage to leaving part of the balance unpaid. In fact, credit card companies typically report your statement balance to the credit bureaus, so whether you pay the full amount or leave a portion of the balance to pay later doesn’t change what goes on your credit report for that month.

Carrying a balance can lower your credit score

Carrying a balance can actually lower your credit score. The unpaid balance plus interest are added to your next month’s balance, making it higher than it would be otherwise. Having a higher balance means you have a higher credit utilization ratio, which is the portion of your available credit that you’ve borrowed. A high credit utilization ratio can lead to a lower credit score, so it’s often recommended that you keep your balances below 30 percent of your total credit limit.

To pay your balance, log in to the website or mobile app; you’ll need to know the routing number and account number for the bank account you want the money transferred from. You can also call the credit card issuer to pay over the phone or mail a check to the address printed on your statement.

Your credit card issuer may have a process for setting up automatic payments so that it will withdraw the full amount of your balance from a checking or savings account each month. Just make sure your balance isn’t higher than the funds you have available if you choose this option, or it could lead to an overdraft.

Written by
Sarah Brodsky
Personal Finance Expert Contributor
Sarah Brodsky is a freelance writer specializing in personal finance and economics. She has more than 12 years of experience writing about credit, consumer banking and investing. Sarah writes for Credit Karma and Impactivate, and her clients have included Glassdoor and the Institute for Humane Studies. Her articles have been published by Haven Life, KeyBank, Investopedia, First Citizens Bank of Raleigh, North Carolina and the Coosa Valley Credit Union.