Credit Builder: Understanding monthly statements and balances | Chime (2024)

FAQs

Do you pay statement balance or current balance to build credit? ›

Paying either should be enough to avoid interest charges, but paying your full current balance when possible can help improve your credit utilization ratio and potentially your credit scores as a result.

Credit card issuers typically report your statement balance to the credit bureaus monthly, but if you have multiple cards with different issuers, you'll likely have credit card balances reported at various times throughout the month.

Your statement balance is the amount shown on your monthly billing statement. It doesn't reflect any new activity since your last statement ended. Instead, a statement balance represents the purchases and payments on your card during a set period, known as your billing cycle, which falls between 28 to 31 days.

A statement balance is the amount that's due at the end of a billing cycle, while your current balance is your total balance as of today.

If you want to stay in good standing with your credit card provider, then it's a good idea to pay off your statement balance each month. What's more, it means that you will avoid paying interest on your purchases.

Experts recommend you pay the statement balance in full every month, but there are times when that may not be possible. In those cases, it's important to make at least the minimum payment so your account stays current and you don't incur any late fees or penalty APRs.

Your current balance updates every time you use your credit card and gives you a better representation of the total amount you owe on your credit card at any given time.

So, even if you pay your balance in full each month, the additional charges made since your last payment will result in a new balance that will then be reported to the credit bureau the following month.

Bottom line. If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt.

Your statement balance is what you owe at the end of a billing cycle, which is typically 20-45 days. Think of it like a monthly snapshot of your account. It's the total of all the purchases, fees, interest and unpaid balances, minus any payments or credits since the previous statement.

What happens if I pay more than my credit card statement balance? ›

That overpayment will subtract from your new charges, resulting in a lower statement balance. If you'd rather have the money back now, you can contact your card company and ask for a refund.

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.

Can I spend my current balance? You can, but you have to be mindful about other financial transactions you have made. Your current balance reflects all your money, in addition to funds that are being held or are in transit, such as checks.

A negative credit card balance is when your balance is below zero. It appears as a negative account balance. This means that your credit card company owes you money instead of the other way around. Typically, this happens when you've overpaid your outstanding balance or if you've had a credit returned to your account.

Credit cards apply interest on your outstanding balance every month. So if you pay only the minimum amount, your outstanding balance will remain high. The interest on the outstanding balance will accumulate month on month, making your debts higher.

When your credit card balance is zero, that means there is no payment due. Keeping a zero balance is a sign that you're being responsible with the credit extended to you.

Managing your current outstanding balance effectively is key to maintaining a healthy credit score and avoiding unnecessary interest charges. Here are some tips: Pay in full: Try to pay off your entire outstanding balance each month to avoid interest charges.

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.