An outstanding balance (commonly known as current balance) on your account refers to all outstanding amounts owing on it, such as purchases, balance transfers, cash advances and any fees or interest charges that accrue over time.
Understand that an outstanding balance differs from your statement balance, which appears on your monthly statement.
What is an outstanding balance?
Deciphering credit card statements can be dauntingly complex. One of the more confusing figures is an “outstanding balance.” While this term can mean different things depending on context, understanding what this term entails will allow you to manage your card responsibly.
An outstanding balance on your credit card account represents how much money is owed on it; this may include purchases, interest charges, cash advances or balance transfers. Your monthly statement or the lender’s website or mobile app provide details regarding this debt; once authenticated you may access this figure.
Your outstanding balance is determined by subtracting your credit limit from the available total credit available on your card, with updates occurring as purchases are made and payments applied for, among other activities on the account. Therefore it’s crucial that you regularly monitor this figure to understand how it impacts both spending habits and credit utilization levels.
Credit card balances may become negative as a result of refunds or statement credits applied to your account, such as those for returning purchases or cash back rewards, or by paying down below zero with auto-pay plans set up to cover minimum due each billing cycle.
Your credit card balance can have a huge impact on your score, as it plays into the calculation of your revolving debt ratio (credit utilization rate). A lower credit utilization rate generally benefits your score.
Experian data indicates that in 2022, the average credit card balance stood at $5,910. This represents an increase of more than 13 percent year-on-year. Carrying a credit card balance can be dangerous without proper care taken to pay off outstanding balances each month as quickly as possible in order to prevent overspending and costly interest rates from accruing quickly. One way of combatting this problem would be paying your outstanding balance off every month if possible.
What is the difference between an outstanding balance and a statement balance?
The outstanding balance of a credit card represents all unpaid expenses such as purchases, cash advances, balance transfers and interest charges that remain outstanding. It serves as an indicator for how much spending can take place before it begins incurring interest charges; you can view it through online banking accounts or calling your card company directly.
Balance outstanding is often confused with credit card statement balance; these two figures do not correspond. A statement balance reflects all transactions and payments that occurred within one billing cycle and does not change until your next monthly statement arrives; in contrast, current balance gives an real-time picture of what owe at any moment; this includes purchases, payments and credits made over time.
If you make only the minimum payments, your remaining balance rolls into the next billing cycle and begins accruing interest, so ideally it would be beneficial if your statement balance could be paid off each month if possible – this is also one way of minimizing credit utilization and maintaining a healthy score.
How Can You Determine How Much Credit You Have Available to Spend? You can quickly calculate how much available credit there is by subtracting your current balance from your credit limit, then subtracting out how much has already been spent as well as any outstanding balances to determine how much credit is still available for future usage.
Though it can be tempting to spend beyond your credit limit, doing so could damage your credit scores and incur costly interest charges. Therefore, it is crucial that you regularly review all of your balances if you use multiple cards with differing balances.
Credit cards provide shoppers with the security of being able to pay later for goods and services they purchase, with many also offering rewards like points or cashback. Credit cards also help build positive credit histories while creating financial independence; but it is crucially important that consumers understand how the balances work; this is why NerdWallet created this guide on credit card balances and their effects on your credit.
How do I find out my outstanding balance?
Find your outstanding balance by logging into your online credit card account or calling customer service. After that, compare it with the statement balance to gain an accurate picture of what your debts are.
Statement Balance refers to the total of money owing at the end of your last billing cycle, which includes purchases and interest charges as well as credits or payments made in that billing period. A statement balance can be found either on your monthly statement or the online account dashboard of most credit cards.
“Outstanding Balance” can be confusing as it differs from both your statement balance and overall credit limit of your card. To determine how much spending is possible on your credit card, subtract your outstanding balance from overall credit limit; once you know this number it would be prudent to spend within that limit in order to avoid going further into debt.
One effective strategy for doing this is making full payments on your outstanding balance each month, which should help prevent incurring additional interest charges. But keep in mind that doing this doesn’t guarantee having a zero-balance each month – that will depend on how your credit card works and is being used.
Along with paying your outstanding balances in full each month, a good rule of thumb for managing credit card debt is keeping usage below 30% of total limit; this can help build strong financial foundations while avoiding unnecessary debt accumulation.
Understanding the difference between an outstanding balance and your credit card statement balance is critical for maintaining good finances. By spending some time understanding both concepts, you can ensure your usage remains under control while preventing debt build-up.
How do I pay my outstanding balance?
Find your outstanding balance by logging into your credit card account online or via the issuer’s mobile app, calling their customer service number, or making a monthly payment – which will also help avoid interest charges while keeping credit utilization rates at a low level – making monthly payments can help avoid interest charges while protecting your score in the process.
Note that an outstanding balance differs from a principal balance, which refers to the initial sum borrowed and remains outstanding with lenders. An outstanding balance includes any accrued interest charges while principal balances do not.
Your outstanding balance on a credit card represents your total debt to the card issuer, including unpaid purchases, balance transfers, cash advances and fees. It also serves as the basis of calculating your credit utilization ratio – an important determinant in your credit score calculation – which means having an excessively large outstanding balance can have serious repercussions even if payments are made on time each month.
While it can be tempting to use credit cards without considering how much money you’re spending, this can be dangerous to your financial health. A credit card’s outstanding balance can quickly reach its limit and lead to costly interest rates and fees; additionally, credit cards are one of the only loans which report your outstanding balance monthly to all three major credit bureaus, potentially damaging your score if it remains high.
Beyond your outstanding balance, another way of finding out the amount you owe is by taking a close look at your most recent credit card statement or invoice. This document will display your balance, transaction summary, minimum payments due and the credit card company’s total outstanding balance.
Calculators can be useful in determining your outstanding balance, which includes any unpaid purchases, balance transfers and cash advances made over a billing cycle. Unfortunately, however, these calculations don’t take into account future scheduled payments or interest charges that may accrue on your debt over time.