Takeaways
- A credit card's outstanding balance is the total amount you owe on the card.
- Credit card outstanding balances reflect current charges, interest, and fees.
- High outstanding balances increase credit utilization and debt-to-income ratios.
- Credit card outstanding balances are different from statement balances.
- Credit card outstanding balances decrease when you pay the statement balance, the full outstanding balance, or make minimum payments.
41% of American adults rely on credit cards to help with their monthly expenses, and only 45% pay off their cards in full each month.[1] When you have an outstanding balance on a credit card, it is the total amount of money you owe to your credit card issuer.
It includes all charges you have made using the card that have not yet been paid, such as purchases, interest, fees, and any balance from the previous billing cycle. Unlike your statement balance, which reflects what you owed at the end of your last billing cycle, your outstanding balance is displayed in real time and shows your current total balance.
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How Your Outstanding Balance Works
Your outstanding balance changes frequently, depending on how often and when you use your card. Every time you make a purchase, withdraw a cash advance, incur a fee, or accrue interest, the amount is added to your outstanding balance. When you make a payment, the balance decreases accordingly.
You usually avoid interest charges if you pay your statement balance in full and on time each month. However, you might only make a partial payment. In that case, the remaining unpaid portion becomes part of your outstanding balance and begins to accrue interest unless you are in a 0% introductory APR period.
Outstanding balances matter because they affect several aspects of your financial life:
- Interest Charges: Interest is calculated based on your average daily outstanding balance. With high annual percentage rate (APY) credit cards, interest charges can accrue quickly.
- Credit Utilization: A high outstanding balance relative to your credit limit can negatively affect your credit score. According to data from Experian, a credit utilization above 30% is when it begins to hurt your credit score.[2] (Plug and play with our Credit Utilization Calculator).
- Minimum Payments: Your card issuer will use the outstanding balance to determine your minimum required payment. Credit card minimum payments often range from 1-3% of your outstanding balance, plus accrued interest from prior billing cycles. (Read more about Minimum Monthly Payments).
- Debt-to-Income (DTI) Ratio: A high DTI can lead to lower credit scores, impacting your ability to qualify for the best credit cards or personal loans.
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How to Calculate Your Outstanding Balance
You can calculate your outstanding balance by totaling all charges and subtracting any payments or credits that have been posted to your account. Most credit card issuers make this calculation easy by updating your balance online or through your mobile banking app.
Here is a practical example:
- Previous balance: $800
- New purchases: $200
- Interest charges: $20
- Payments made: $500
Outstanding balance = $800 + $200 + $20 - $500 = $520
This total includes all amounts currently owed, even if they are not yet reflected in your billing statement. Your card issuer may also break down the balance into different categories, such as:
- Purchases
- Cash advances
- Balance transfers
- Fees and interest
Some issuers will also display your available credit and credit limit, providing a snapshot of how much you have left to spend.
Outstanding vs. Statement Balance
Many people confuse the outstanding balance with the statement balance, but they serve different purposes.
- Statement Balance: This is the total you owed at the end of your last billing cycle. It includes purchases and charges made during that specific time frame and does not reflect any new transactions or payments made after the cycle ended.
- Outstanding Balance: This represents the total amount you owe, including all transactions, fees, and interest accrued on your account since your last statement.
Paying the statement balance by the due date avoids interest. Paying only part of it means your outstanding balance will carry over and continue to accumulate interest.
Read More: What Are the 5 C's of Credit?
When to Pay Your Outstanding Balance
You are generally required to pay at least the minimum payment by the due date listed on your statement. However, deciding when and how often to pay your outstanding balance depends on your financial goals.
Here are some common approaches:
- Pay the Full Statement Balance: This is the best way to avoid interest charges entirely and maintain a strong credit score.
- Pay the Full Outstanding Balance: This amount ensures you are completely caught up on your card and can help reduce your credit utilization ratio.
- Pay Multiple Times per Month: Making several monthly payments can lower your average daily balance, which may reduce interest charges and improve your credit utilization.
- Pay Before the Statement Closing Date: Paying additional funds between your due date and the statement closing date can help reduce your reported credit utilization.
- Pay the Minimum Payment: You must at least make the minimum payment to avoid late fees and damage to your credit score. However, paying only the minimum means interest will continue to accrue on the remaining balance.
Related: How to Become Debt Free
Smart Summary
An outstanding balance on your credit card fluctuates daily based on your activity and can differ from your statement balance, which is fixed at the end of each billing cycle. Understanding your outstanding balance is critical for avoiding interest and monthly fees, managing your credit utilization, and maintaining good financial health. You can calculate your outstanding balance by adding all new charges to your existing balance and subtracting any payments made.
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(1) Civic Science. More Than 40% of American Households Rely on Credit Cards to Pay the Bills, Leading to a Vicious Debt Cycle. Last Accessed April 23, 2025.
(2) Experian. What Is a Credit Utilization Rate? Last Accessed April 23, 2025.
