What Is a Credit Card Balance?

A credit card balance is the total amount of money that a cardholder owes the credit card issuer. Understanding what that entails and how credit card balances work is key to managing your credit effectively. It can also help you avoid unnecessary interest. Let’s take a closer look at credit card balances, what contributes to your balance, how it impacts your credit and tips for managing your credit card balance.

How does a credit card balance work?

Your credit card balance is how much you owe a credit card company. For example, if you haven’t yet used any of your available credit, you may have a credit card balance of $0. You can typically see your credit card balance by logging into your credit card account.

What contributes to your credit card balance?

Each time you use your credit card for purchases, that amount is added to your account balance. However, your account balance can also include the following unpaid charges:

• Interest from unpaid balances
• Late fees or other penalties
• Annual fees
• Other types of transactions, such as cash advances and balance transfers (if applicable)

When is your credit card balance updated?

Current balances are updated in real time, and as you use your card, those transactions are added to your balance. Keep in mind, however, that this is not the same as your statement balance, which is fixed at the end of your billing cycle. This means your statement balances can be different from your current credit card balances. (Your minimum payment due can also differ from both the current and statement balance and is usually a percentage of what you owe.)

The balances reported to the credit bureaus can also differ from the amount that appears in your accounts if recent activity (such as a payment or transaction) hasn’t yet posted.

How does your credit card balance affect your credit?

Your debt amount is a key credit score factor, and that includes both your total debt as well as your credit utilization (the amount of credit you’re using across revolving credit lines, such as credit cards). In general, lower credit card balances can help you achieve a higher credit score, while higher balances can negatively impact your credit score.

Managing your credit card balance

Credit card balances can play an important role in your financial life, and it’s important to actively manage them to avoid the perils of credit card debt. Here are a few practical ways you may manage your credit card balances and help keep debt at bay:

• Aim to pay off your full balance each month: This can help your credit score and help you avoid interest charges.
• Monitor spending and account activity: Logging into your various credit accounts on a regular basis can help you understand your spending habits and potentially catch suspicious activity.
• Set up credit card alerts: Some credit card issuers will allow you to set up alerts that can help you stay on top of your balances and keep up with payments. This is included with select Citi^® credit cards.

Once you’ve developed healthy habits around your credit card balances, you can more effectively pursue your other financial goals.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.