Statement balance: If you pay the statement balance (or more) by the due date, you maintain your credit card's grace period and won't accrue interest on new purchases. Pay at least this amount each month, and you won't pay interest on your credit card purchases.
Pay your statement balance in full to avoid interest charges
But in order to avoid interest charges, you'll need to pay your statement balance in full. If you pay less than the statement balance, your account will still be in good standing, but you will incur interest charges.
Which Balance Should You Pay? Which balance should be paid each month depends on a person's financial goals and situation, but generally, it's wise to pay off the statement balance every month so you do not incur fees and interest.
If you can, paying the balance in full each statement period is the better option and offers several benefits. Interest-free freedom: If you pay off the balance in its entirety, you can save some serious money by helping you avoid costly interest payments.
When your statement is issued, there's a period before it gets to you and before you pay the balance. During this period, you may be charged interest each day, based on your annual percentage rate (APR). Then, though you may have paid your current statement balance in full, the charge appears on your next statement.
Your bank may consider waiving any late fees or forgoing implementation of a penalty interest rate. Contact your bank to explain your specific situation and to request a fee waiver or maintenance of your current interest rate.
Paying only the statement balance still lets you dodge interest until the next billing cycle. On the plus side, you keep more cash on hand and have more time to finance your purchases, thanks to your grace period.
Paying your credit card bill early is not intrinsically good or bad, but it can help you avoid negative habits such as high credit utilization and late payments.
However, if you only make the minimum payment on your credit cards, it will take you much longer to pay off your balances—sometimes by a factor of several years—and your credit card issuers will continue to charge you interest until your balance is paid in full.
Even though you paid off your account, there could have been residual interest from previous balances. Residual interest will accrue to an account after the statement date if you have a balance transfer, cash advance balance, or have been carrying a balance from month to month.
Credit card companies report your balance to the credit bureaus every month, typically at the end of each billing cycle. If you make your payment shortly before your statement date, it could help reduce your credit utilization, which can help you increase your credit score or maintain good credit.
If your credit card statement reflects a zero minimum payment due - even if you have a balance on your card - it is because of recent, positive credit history. A review of your recent credit history and determination to waive your minimum monthly payment allows you to skip your monthly payment for a statement cycle.
When your statement is issued, you'll have a statement balance and a minimum amount due. If you pay the statement balance on time, there should not be a balance to charge interest on.
Paying off your credit card balance every month is one of the factors that can help you improve your scores.
The statement balance is where your current bill stopped, and is what you currently owe. Pay the statement balance in full and you won't accrue interest charges.
Statement balance: If you pay the statement balance (or more) by the due date, you maintain your credit card's grace period and won't accrue interest on new purchases. Pay at least this amount each month, and you won't pay interest on your credit card purchases.
The Takeaway
The 15/3 credit card payment rule is a strategy that involves making two payments each month to your credit card company. You make one payment 15 days before your statement is due and another payment three days before the due date.
Paying your statement balance in full before or by its due date can help you save money on interest charges. Alternately, paying your current balance in full by its deadline can improve your credit utilization ratio and your credit health.
As you continue to make purchases using your credit card, you may see your current balance increase until you make a payment. Note that whatever balances you don't pay off will accrue interest, so you will owe more in the next billing cycle.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
Credit cards charge interest on any balances that you don't pay by the due date each month. When you carry a balance from month to month, interest is accrued on a daily basis, based on what's called the Daily Periodic Rate (DPR). DPR is just another way of saying what your daily interest charge is.
Zero-percent APR cards generally offer promotional periods between 12 and 21 months in length during which no interest is charged on your balance. Many consumers use 0 percent APR cards to save on interest, pay off debt more quickly or catch up on their savings.
When you pay only the minimum payment on Credit Card, the remaining outstanding balance is carried forward to the next billing cycle. This balance attracts interest charges, which can quickly accumulate and lead to a cycle of debt if not managed properly.