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A credit card balance is the total amount of money you owe on your account. However, you may not know exactly how card issuers calculate what you owe or whether it's good to carry a balance.
Below, Select explains how a credit card balance works, so you can familiarize yourself with this important term on your bill.
- How is a credit card balance calculated?
- Is it good to carry a balance on a credit card?
- What's the difference between a credit card balance and statement balance?
- Where can I find my credit card balance?
Card issuers calculate your credit card balance by adding up any charges you make, along with accrued interest, late payments, foreign transaction fees, annual fees, cash advances and balance transfers.
Credit card balances also reflect any payments or statement credits made to your account. Your balance can change from month to month depending on whether you pay your bill in full and on time.
No, perhaps one of the biggest credit card myths is that it's good to carry a balance on a credit card. Carrying a balance on your credit card doesn't help your credit score, it only has the potential to hurt it.
Lingering balances on your account directly affect your credit card utilization rate. This is the amount of credit you're using compared to the amount of credit you have available. The higher your credit card balance, the higher your utilization rate, which can hurt your credit score.
Take action: Check your credit score for free.
If you carry a balance on your credit card, you'll also have to pay interest charges (unless you have a card with an introductory 0% APR on new purchases). It's a waste of money to pay interest on your balance if you can afford to pay off your credit card bill in full each month.
If you're already carrying a balance on a credit card, consider transferring it to a balance transfer credit card, such as the Discover it® Balance Transfer. This can help you save money in the long run, if you commit to paying off your balance during the introductory 0% APR period for 18 months (17.24% to 28.24% variable APR thereafter). There's a 3% intro balance transfer fee, up to 5% fee on future balance transfers. (see terms)
Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases-automatically.
Discover will automatically match all the cash back earned for all new cardmembers at the end of your first year.
0% for 18 months on balance transfers; 0% for 6 months on purchases
17.24% to 28.24% Variable
Balance transfer fee
3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Foreign transaction fee
*See rates and fees, terms apply.
When you receive your bill, there will be two balances listed: current balance and statement balance. A current balance is the total amount of money you currently owe on your credit card. Meanwhile, a statement balance is made up of all the charges you made during the last billing cycle. This doesn't include any pending charges or purchases made after your billing cycle ended.
There are several ways to find your credit card balance. The simplest way is to log into your account online or via your card issuer's mobile app. Your current balance and statement balance will also be shown on your bill along with the required minimum payment. You can also call customer service.
For rates and fees of the Discover it® Balance Transfer, click here.