What is a credit card balance?

Credit card statements can be a bit tricky to navigate at first. So, it’s good to know that when you read your credit card statement, one of the most important lines to take note of is your balance.

Keeping track of your statements is essential for managing credit card balances and paying off your debt.

What is a credit card balance?

A credit card balance is the amount of money you owe your credit card company at any given time. The charges you’ve made to the card and cash advances you’ve taken out all add to your balance. This also includes any interest and fees the credit card company may charge you.

If you transfer a balance from another account, the amount that you’re transferring, plus any fees, is also added to your card’s balance.

Your balance changes as you use your card. Putting a purchase on your card causes your balance to go up, while paying your credit card bill makes the balance go down. When you’ve paid off the whole balance, it will reflect an amount of zero.

What does it mean to carry a balance?

When you log into your credit card account online or through a mobile app, you’ll likely see two balances: a statement balance and a current balance. Your statement balance is the amount you owe at the end of a billing cycle, and your current balance is the amount you owe right now.

Carrying a balance occurs if you don’t pay the full amount of your balance by the statement due date, because the amount you still owe will carry over to the next billing cycle. You’re usually charged interest when this happens. Then, when your next statement is created, you will owe the amount that was carried over along with the interest, as well as any new charges.

Carrying a balance usually isn’t a good idea. For one thing, it can be expensive as interest may begin to pile up. For most credit cards, you have until your payment is due to pay your full statement balance and avoid being charged interest. This is called your grace period, which most but not all cards offer. If you don’t pay the entire balance off by the due date, you’ll start incurring interest on the portion you didn’t pay.

What is a negative credit card balance?

If your balance is a negative number, the credit card company owes you money. This can happen if you get a refund for a purchase or if the credit card company applies a statement credit, such as cash back from a rewards program, to your account. Paying the credit card company more than the current amount you owe can also result in your balance being less than zero.

A negative balance also means — temporarily — you can charge more than your limit to your credit card. For example, if you have a balance of -$100 and your credit limit is $2,500, you’d technically be able to charge $2,600 to your credit card (although maxing out your card is never a good idea). Your account would then show a balance of $2,500. The limit your credit card company set for the card wouldn’t change, but in this case, once you have a positive balance again, your limit will still be $2,500.

Another option is to ask your credit card company to write you a check for a negative balance or to deposit the money it owes you in your bank account. Alternatively, you can just continue to make charges to the card, which will eventually offset the negative balance.

How to check your credit card balance

You can check the status of your credit card payment and current balance through your account on the credit card issuer’s website or with its mobile app. You’ll be able to view your current balance and recent activity on the card with the following steps:

1. Set up a username and password if you haven’t managed your account online before.
2. If you already have login details, just enter them when prompted.
3. After you’ve accessed your account, an option to view your statements and documents should be available. Choose the most recent month’s statement to see the most up-to-date amount.
4. The current balance can be found within the document.
5. All recent billing activity, including transactions and payments, will also be available for review.
6. If you have any questions or concerns about your current balance, a customer service number should be available on the document.

Most issuers also allow you to check your credit card balance by phone. Locate the phone number on your credit card or statement, and be ready to provide information about your account and verify your identity. You’ll be able to choose from a menu of options, one of which may be to hear your current balance and other account details.

If you are signed up for paper billing, you can also see your balance on your credit card statement in the mail. However, keep in mind that this won’t necessarily reflect your current balance but instead reflects your balance when the statement was created.

The bottom line

Understanding credit card balances can make it easier to manage existing debt. Checking your balance routinely can also help prevent you from missing a due date. To further understand how to pay off any balances you may have, check out one of Bankrate’s Credit Card Calculators to start saving today.

Once you familiarize yourself with your credit card statement, establish goals for yourself. Your goals may include paying your balance off in full each month, keeping your credit utilization below 30 percent or building your credit score to one day apply for one of the best credit cards. As you continue to practice positive credit habits, you will be on your way toward building strong credit health.