The current balance is the amount of money on one’s credit card when the bank accounts for prospective transactions. If one wants to understand precisely how much money he or she has on the credit card, it is necessary that one knows the differences between the current, the available, the statement, and the account balances. All these balances show the amount of money, but there are some differences.
The current balance on credit card is the amount one owes on his or her bank account, minus all the pending purchases and payments. The current balance, which is also called the pending balance, includes all of the purchases that one has made and that have been processed by the bank since one last paid his or her bill. In other words, the credit card activity is billed in cycles, for example, monthly. After the billing cycle ends, the credit card issuer makes a document or statement, detailing the activity that occurred during that billing cycle. This document also informs the card owner of the payment due and the due date.
After one’s credit card statement was made, the person usually makes purchases, payments, and other money transactions that change one’s outstanding credit card balance. All these transactions are reflected in the current balance that may be higher or lower than the statement balance; it depends on the transactions one makes. For example, if one makes a purchase or withdraws money after the billing statement was made, the current balance will be higher than the statement balance. However, if one posts a payment to the account after the billing document was created, the statement balance will be higher than the current one.
The statement balance is the balance that is printed on one’s most recent credit card billing document. This is the balance of one’s credit card at the moment of the account statement closing date, which is the day the billing cycle ends, and the credit card document is printed. The statement balance is the main balance on the credit card bill and the full amount that one owes. The statement balance always changes from billing cycle to billing cycle, and it depends on how much money one spends within each statement period.
It is essential and necessary to pay the full statement balance by the due date in order to avoid accruing interest, penalty fees, and a higher APR. Usually, one needs to start the billing cycle with a $0 balance. If this is not possible, one needs at least to pay the previous balance in full before the end of the billing period. If one did not pay the previous balance in full, the statement balance he or she sees might already include a finance charge. If one pays the previous balance in full and the current balance is higher than the amount needed, one will see the remaining balance plus any new money transactions on the next billing statement.
The available balance is the amount of money the credit card holder can spend right at the moment. The available balance shows the amount of money in one’s bank account before adjusting for the pending charges. This is the amount that the card owner can withdraw at any given moment, but this does not only mean the money available to withdraw as there are more ways to use them.