Interest rates for debt consolidation loans depend on your financial situation, but they tend to be lower than those of traditional credit cards. If you only make the minimum payment, your card issuer will charge you interest on the portion of the balance you don’t pay off by the due date. The company will continue to charge interest until the amount, including the additional interest, is paid back in full.

Creating a budget can also help you detect unnecessary expenses and cut them out in the process. The great thing about removing expenses is that your credit card balance won’t grow as much, and you’ll have extra money to pay off debt. The statement balance is the amount owed at the end of a billing cycle, while the current balance includes all transactions up to the present moment. Available balance indicates how much credit you can still use before reaching your credit limit.

• A high balance will bring down your credit score because it generally corresponds with a high credit utilization ratio, but that’s not the only factor that can hurt your score.
• All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
• Some of the best rewards credit cards also tout decent, yet shorter, balance transfer offers.
• Spending most or all of your available credit every month — even if you pay off your balances — can damage your scores.
• In this article, we’ll explore what a card balance is and show you how to manage it.

The trade-off is that personal loan interest rates are usually higher than what you’d get with a home equity product, especially if your credit score has taken hits from carrying high balances. Personal loan rates are averaging about 12.5% currently, but can be two to three times higher for those with poor credit. Unlike balance transfer credit cards, there’s no promotional period either, so you’ll start paying interest immediately. You’ll also need to qualify to borrow based on your current income and credit profile. Your credit card balance is the sum of all charges, fees, and interest that have been posted to your account and not yet repaid. It is the outstanding debt you carry with the credit card company, representing your financial obligation.

The higher your credit card balance, the higher your utilization rate, which can hurt your credit score. Amounts are credited to your credit card account each time you make a payment. A credit might also be added when you return something you bought with your credit card, when you earn a reward, or when a mistake in a prior bill is corrected. If the total of your credits exceeds the amount you owe, your statement shows a credit balance.

You will, however, have to pay a balance transfer fee (usually around 3%, so $150 on a $5,000 transfer). If you return an item or overpay your bill, your balance might be negative (meaning the credit card company owes you money). When you use a credit card, you borrow money from the credit card issuer. So, to put it simply, your balance is the amount you owe, or your credit card debt. Credit cards can be valuable tools for managing day-to-day expenses and building your credit score. However, it can be important to stay on top of your balance to avoid debt and interest charges.

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This average daily balance is then multiplied by the daily periodic rate (your APR divided by 365 or 366) and the number of days in the billing cycle to arrive at the total interest charge. Below, Select explains how a credit card balance works, so you can familiarize yourself with this important term on your bill. It’s best to pay off your balance at the end of each month to avoid interest charges and avoid spending more than you can repay. A higher current balance will reduce your available balance and push you closer to your credit limit. A balance transfer offer from Discover may be able to help you save money on interest. Our partners cannot pay us to guarantee favorable reviews of their products or services.

Every other month, my Discover it Chrome gives me a balance transfer offer, and over the years, I’ve taken advantage of great offers for a 0% annual percentage rate. The money you’d save on interest charges would outweigh the $250 balance transfer fee and slightly reduce the monthly payment you’d need to reach your 15-month pay-off goal. So the total amount you would repay is $478 less if you went with a balance transfer. While many people think of balance transfer cards as exclusively for credit card debt, you can often transfer different kinds of debts, too. When you regularly check your credit card balance, you can catch overspending early and pay down your balance long before you max out your credit limit. A credit card balance is the total you owe on your card, and it changes as you make purchases, pay bills, or get charged interest.

• Interest charges, discussed further below, are another component that can increase your balance when payments are not made in full.
• This grace period applies only to purchases and not to cash advances or balance transfers, which incur interest from the transaction date.
• Running the numbers for each option can help you make an informed choice.
• The less of your available revolving credit you use, the better it is for your credit score.
• It’s generally a good idea to pay off the balance entirely each billing cycle to avoid interest charges and minimize your total debt levels.

That’s why many financial experts suggest paying as much of your balance as possible—ideally, the full statement balance. Finally, if you receive paper statements in the mail, they will list your credit card balance. That way, you’ll demonstrate responsible use of credit — without carrying a monthly balance that accrues interest.

How to Consolidate Credit Card Debt: 5 Best Options

Credit card companies allow you to make a minimum payment each month, usually around 2–3% of your total balance. While this seems helpful, it can lead to long-term debt if you only pay the minimum. If you don’t pay your full statement balance, the remaining amount starts to gather interest daily.

This creates a clear end date for your debt and avoids the risk that comes with borrowing at a variable interest rate. Since personal loans are unsecured, you won’t risk losing what is credit card balance collateral if you can’t make payments, either. A balance transfer credit card is a type of card designed to help you pay down existing debt balances you have on other credit cards.

The information for the Discover it Chrome Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer. For example, if your card’s APR is 20%, your daily interest rate is around 0.055%. When you check your monthly statement, you may see different terminology listed there. Understanding the different terms can help you to understand your statement, and how much you should pay.