Understanding Your Credit Card Balances Your credit card statement contains several different balance figures, and knowing which one to pay can save you hundreds of dollars in interest charges each year. The three most common balances you will encounter are the statement balance, the current balance, and the minimum payment due. Statement Balance The statement balance is the total amount you owed at the end of your billing cycle. This is the most important number when it comes to avoiding interest charges. If you pay your full statement balance by the due date, you will not be charged any interest on your purchases. Credit card issuers provide what is known as a grace period — typically 21 to 25 days between the end of your billing cycle and your payment due date. During this grace period, no interest accrues on new purchases as long as you paid your previous statement balance in full. Current Balance The current balance includes your statement balance plus any new charges, payments, or credits that have occurred since your last statement was generated. While paying the current balance will certainly keep you interest-free, it is not strictly necessary. Paying the statement balance is sufficient to avoid interest charges. Minimum Payment The minimum payment is the smallest amount you must pay by the due date to keep your account in good standing. While making the minimum payment will prevent late fees and negative marks on your credit report, it will not protect you from interest charges. Any unpaid balance after the minimum payment will accrue interest at your card’s annual percentage rate (APR). The Best Strategy To avoid interest charges entirely, always pay your full statement balance by the due date. This allows you to use your credit card as a convenient payment tool without ever paying a cent in interest. If you cannot pay the full statement balance, pay as much as you can above the minimum payment to reduce the amount of interest you will be charged. What Happens If You Carry a Balance If you do not pay your statement balance in full, you will lose your grace period on new purchases. This means interest will begin accruing on new purchases immediately, rather than waiting until the next billing cycle. The only way to restore your grace period is to pay your entire balance in full for two consecutive billing cycles.