Your card app shows two numbers that look like what you owe. They’re both right, but they answer different questions. One tells you how to avoid interest. The other tells you how to get the card to $0.
The two balances
Your statement balance is what you owed on the day your last statement closed. Your current balance is that amount, plus anything you’ve bought since, minus anything you’ve paid.
| Balance | What it covers | Pay it to |
|---|---|---|
| Statement | Purchases up to the statement date | Pay no interest on those purchases |
| Current | Everything up to today | Bring the card to $0 |
| Minimum | A small part of the statement | Stay in good standing only |
What happens if you pay less
Card issuers regulated by the federal government must give you at least 21 days after your statement to pay without interest on new purchases. Pay the whole statement balance in that window and the purchases cost you nothing extra.
Pay any less, even a few dollars less, and the interest-free period is gone for those purchases. Interest then runs on each purchase from the day you made it until the day you pay it off.
Pay the statement balance
- Statement balance
- $1,200.00
- You pay by the due date
- −$1,200.00
- Interest
- $0.00
At 20.99% a year, with purchases spread over a 30-day month.
Pay half
- Statement balance
- $1,200.00
- You pay by the due date
- −$600.00
- Interest on your next statement
- about $28
At 20.99% a year, with purchases spread over a 30-day month. Your bank’s exact figure depends on your purchase dates.
Which one to pay
- The statement balance, every month if you can. It’s the cheapest choice that still keeps cash in your account until the bill is due.
- The current balance if you want the card at $0, for example before you close it or stop using it.
- The minimum only in a month when you truly can’t pay more, and pay as much above it as you can.
Mr. Loonie’s tip Set up an automatic payment for your full statement balance. You never pay interest and you never miss a due date.