Explain my credit card statement
October 4, 2015 10:39 PM Subscribe
What is current vs statement balance?
I'm confused. I know this is basic stuff but bear with me.
I currently have a negative current balance, but a large statement balance. I have 100% credit for my credit line which I usually look to, to see the total amount I owe.
Do I owe that statement balance?
I'm confused. I know this is basic stuff but bear with me.
I currently have a negative current balance, but a large statement balance. I have 100% credit for my credit line which I usually look to, to see the total amount I owe.
Do I owe that statement balance?
Best answer: Statement balance is what was due when the statement period is up. So if your statement runs say May 3 to June 3, the amount you owe on June 3 is your statement balance. If your payment date is on June 15, there are 12 days where you can accrue extra charges but they're actually in next month's statement, so that's where the current balance comes in. If your current balance is negative, it's likely because you've paid off more than you owed and/or you received credits back from merchants (for example, if I bought shoes from Amazon within one statement month but returned them and got the credit in the next statement month, it could show up as negative money owed for that next statement month).
Also FYI I'm on autopay and sometimes my online information will not update as fast as the payments are taken out so there's still a statement balance listed for a couple days past the payment due date despite my having already paid it in full, but that does end up getting reflected without intervention if I just wait it out a few days.
posted by vegartanipla at 10:55 PM on October 4, 2015 [2 favorites]
Also FYI I'm on autopay and sometimes my online information will not update as fast as the payments are taken out so there's still a statement balance listed for a couple days past the payment due date despite my having already paid it in full, but that does end up getting reflected without intervention if I just wait it out a few days.
posted by vegartanipla at 10:55 PM on October 4, 2015 [2 favorites]
Before I say anything else if you want to generally know more about this stuff you should consider checking out earlier AskMes about credit cards. This one and this one are pretty good.
So re: your question the answers above are right. This is a bit more confusing IMO nowadays because so many people have switched to online billing, so the whole notion of "we get a statement (tied to a specific date) once a month in the mail and reconcile it against our saved receipts and then mail in a check paying our statement balance" is just not a thing for a lot of people, much like balancing one's checkbook seems less important when you can just go online any time to check your account info.
As an aside, many people choose to only pay the statement balance on their account even if the current balance is higher, because that's all you need to do to avoid paying any interest on the credit card. The theory being paying off the current balance is essentially giving the credit card company free money rather than letting that money earn you something in the interim until the next statement. For the low amounts most people deal with and given the incredibly low savings account interest rates we have right now it probably doesn't matter much either way, but it's a good habit in theory.
(Example with numbers: if my statement balance is $1000 but the current balance the day I pay is $1500, I can just pay the $1000 and have $500 to do whatever with until the next month's statement. If my savings account gives me 1% APY interest (which is honestly optimistic these days) and I leave the money in there for an extra month that's $0.42 I've made, rather than paying my credit card co early. As you see it's not a big deal for small amounts but does add up for larger balances. Also I could have bought a hot stock or something with that $500 and made more.)
posted by Wretch729 at 8:58 AM on October 5, 2015
So re: your question the answers above are right. This is a bit more confusing IMO nowadays because so many people have switched to online billing, so the whole notion of "we get a statement (tied to a specific date) once a month in the mail and reconcile it against our saved receipts and then mail in a check paying our statement balance" is just not a thing for a lot of people, much like balancing one's checkbook seems less important when you can just go online any time to check your account info.
As an aside, many people choose to only pay the statement balance on their account even if the current balance is higher, because that's all you need to do to avoid paying any interest on the credit card. The theory being paying off the current balance is essentially giving the credit card company free money rather than letting that money earn you something in the interim until the next statement. For the low amounts most people deal with and given the incredibly low savings account interest rates we have right now it probably doesn't matter much either way, but it's a good habit in theory.
(Example with numbers: if my statement balance is $1000 but the current balance the day I pay is $1500, I can just pay the $1000 and have $500 to do whatever with until the next month's statement. If my savings account gives me 1% APY interest (which is honestly optimistic these days) and I leave the money in there for an extra month that's $0.42 I've made, rather than paying my credit card co early. As you see it's not a big deal for small amounts but does add up for larger balances. Also I could have bought a hot stock or something with that $500 and made more.)
posted by Wretch729 at 8:58 AM on October 5, 2015
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posted by metahawk at 10:46 PM on October 4, 2015 [1 favorite]