Should I pay my statement balance or current balance? Generally, you should prioritize paying off your statement balance. As long as you consistently pay off your statement balance in full by its due date each billing cycle, you'll avoid having to pay interest charges on your credit card bill.
Consistently paying off your credit card on time every month is one step toward improving your credit scores. However, credit scores are calculated at different times, so if your score is calculated on a day you have a high balance, this could affect your score even if you pay off the balance in full the next day.
Paying the full statement balance by the due date can help you avoid being charged interest. Cardholders typically have approximately four weeks from the statement close date to make a payment, and new interest charges aren't applied to any unpaid balance until after that due date.
The current balance of your bank account is the total amount of money in the account, while the available balance is the amount you can actually access and use. The available balance is important to track because it reflects the funds that you can withdraw and use, and may be less than the current balance.
The current balance is a running tracker of how much you owe on your card at any given time. This means that, unlike a statement balance, it will change depending on your spending. For example, let's say you spent $500 during a billing cycle, and another $50 after your cycle ends.
Credit and debit cards: 1-2 business days. Check deposit: 1-2 business days.
Use the debt snowball method
In order to use this method, list all of your credit card debts from lowest balance to highest balance. Now start concentrating on wiping out the credit card with the lowest balance while still making the minimum payments on the other cards. The point of this strategy is to build momentum.
Statement Balance: Provides a snapshot of your financial status at the end of the billing cycle. Outstanding Balance: Reflects your real-time debt, changing with every new charge, payment, or fee made after the statement date.
If you're close to maxing out your credit cards, your credit score could jump 10 points or more when you pay off credit card balances completely. If you haven't used most of your available credit, you might only gain a few points when you pay off credit card debt.
Your available credit can go up or down, depending on your account activity: the more purchases you make with your card, the less available credit you will have. And the fewer purchases you make — or the more of your balance you pay off — the more credit is available to you.
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.
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.
Generally, your overpayment will appear as a credit in the form of a negative balance on your account. This negative balance will roll over towards any new charges you make or outstanding balances for the next month.
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.
It's a good idea to pay more than the minimum payment — ideally the full statement balance — each month, if you can. You'll save on interest, lower your balance and avoid debt.
Consider Consolidating Your Debt
Debt consolidation can be a good strategy if you have good credit and are feeling overwhelmed by the number of debt payments you have to make each month. Debt consolidation typically works best for paying off credit cards and personal loans.
Paying off the full outstanding balance ensures that you avoid interest charges and maintain a healthy credit score. If paying the full amount is not feasible, you should at least pay the minimum amount due, as specified in your credit card statement, to avoid late payment fees and damage to your credit score.
What is the 15/3 rule in credit? Most people usually make one payment each month, when their statement is due. With the 15/3 credit card rule, you instead make two payments. The first payment comes 15 days before the statement's due date, and you make the second payment three days before your credit card due date.
Pay off high-interest credit cards first
Paying off the debt on the card with the highest interest rate first is one method to reduce credit card debt. This is the “debt avalanche method.”
It's important to refer to your available funds if you're planning to make a purchase or you have a recurring payment or transfer in the next few days. If the new transaction is more than your available balance, it could result in a nonsufficient funds, or NSF, fee or overdraft fee.
It is the difference between your credit limit (the total max amount you can charge on the card) and your current balance. As you make purchases using your card, the cost of each purchase is subtracted from your credit limit. The amount you're left with is known as your available credit.
What is the Remaining Statement Balance? The amount a cardholder owes on their credit card, as reflected on their current bill, adjusted for payments, refunds, charges being disputed, or other transactions.