My credit card has two balances, like I believe most do, the statement balance and the current balance. I'm aware of what both these mean. Each month I pay my statement balance off completely to avoid interest charges. I usually make payments several times a month and will lose track of how much I have paid towards the card. The statement balance on my app isn't updated until the next cycle. Is there any easy way track how much more I have to pay to avoid interest?
17Why are you paying it several times a month?– Chris CudmoreJul 26, 2018 at 14:22
6Have you tried calling them? Alternatively, a lot of credit card companies have an online login you can access to view your outstanding balances.– dvnielJul 26, 2018 at 14:23
5@ChrisCudmore I use it like a debit card for the points and I don't like paying one huge payment at the end of the month.– ChrisJul 26, 2018 at 14:27
11I think all the answers will ultimately point to the fact that the easiest way is to pay it once per month.– Hart COJul 26, 2018 at 15:08
2When you make a payment (in full or in part) of your credit card bill, the statement balance is not updated on the credit card website either; the statement balance remains whatever it was when the statement was issued, and stays so until the next statement is issued.– Dilip SarwateJul 26, 2018 at 16:38
With respect to the existing answers, I don't see why/how this is actually an issue. If you start with the premise that you use the card like a debit card, you are all set. Each week, you are paying whatever shows as a current balance, right? If a bill is cut on the last day of the month, and then due by the 21st, how could you not have paid the statement balance by then?
I don't have any cards that say how much was paid specifically towards the last statement, but it's easy enough to sign in, see the statement balance, and the payments made on dates since then.
Given the comment from BlueRaja I recommend If I were to buy something a day before my due date for my credit card bill, would I be charged interest? for further reading. It clarifies how the credit card cycle works.
1This is what I do, I get paid twice a month and pay my current balance on payday. Ensures that I don't get charged interest. Jul 26, 2018 at 17:34
Then I think we agree. Even if you pay before the statement is cut and have a true statement balance, the grace period will have to be after the next pay day. I don't know of any cards with a shorter grace. It seems my payments are due about three days before next bill is cut. Jul 26, 2018 at 17:39
4I think his concern is that he'd pay the bill on the 10th, then make a purchase on the 11th, and then on the 21st they'd charge interest on that second purchase. Maybe an explanation of how credit card payments/interest work would help (because I actually thought that's how it works too)? Jul 26, 2018 at 21:27
1Similar to @MichaelMcGriff , I pay my current balance every paycheck (every 14 days) on a card that I use for day to day purchases, and have never been charged interest. As long as you pay a total amount of money equal to or greater than the statement balance, before the due date for that statement, you should not be charged interest, no matter how many payments that’s split into. “Prepaying” (e.g. paying off a purchase before your statement comes) will just result in the next statement balance being smaller, so it all works out.– bogardpdJul 27, 2018 at 19:25
Fastest is the card's Website, smartphone "app" or 800-number. You can pay as often as you please. As to how "statement balance" relates to when interest is charged, here are the details.
There is a thing called a billing period, as you may know.
At the end of the billing period, they compute the statement balance, and give you 20 days or so to pay it. If you do so, you don't get charged interest.
Any payments between the end of the billing period and the due date get credited toward the statement balance. As long as those payments equal or exceed the statement balance, you're all set.
Let's look at the gory details of an example:
- May 1 - Billing period 1 begins
- May 5 - Charge A
- May 10 - Charge B
- May 22 - Charge C
- May 27 - Payment received, equals Charge A
- May 31 - End of Billing Period 1. Statement balance computed (charges B+C)
- June 1 - Billing period 2 begins
- June 5 - Charge D
- June 10 - Charge E
- June 22 - DUE DATE for Billing Period 1
- June 24 - Charge F
- June 30 - End of Billing Period 2
In order to avoid interest in this scenario, they must receive payments totaling the statement balance (charges B+C) between June 1 and June 22. That's it.
Note that Charge A doesn't even become part of the Statement Balance because it was paid off before the end of the billing period.
Of course you don't need to pay exactly the value of the charges; if they're $424.16 and $330.11 you can pay $500 and $300 and you're all good.
Note that Charge D and E are completely irrelevant. Their interest won't start to run until July 22, when their billing period comes due. You are welcome to pay those off earlier; you can even pay them before you charge them. That's legit. Overpayments get carried as a credit balance, i.e. it's your money.
The statement balance is the balance you need to pay in order to avoid interest charges. Your best bet is to make one payment, that is at least the statement balance, either a day or two after the statement closes, or a couple of days before. That is assuming online payments.
Once that payment is made, you know you will not be charged interest. You can then make numerous payments with impunity. That will only effect next month's statement balance.
The only reason I suggest doing it this way is for ease of management. You want to automate as much as you can in your life and that is one way of partially automating things. If you have a checklist of things you have to do each month, paying your statement balance should be an item on that list.
Keep in mind, that returns will count toward statement balance payments. For example, lets say you bought something for 1200, and some other things for 500. And then do no other charges for some time. Your statement balance will be 1700. You then return the 1200 item. Most likely your CC will only allow you to pay 500, which is the card balance.
The little payments render the statement balance unreliable, well, the 'next' statement balance, right? Unless there are no little payments between cycle close and statement receipt. So would still have to time it out.– Hart COJul 26, 2018 at 14:54
3"or a couple of days before" - I recently did that, and a pending charge hit (before the statement was cut). When the bill came, I thought I paid in full, but I messed up. So even though I paid say $2900 against what would have been $2950 in charges, the $50 was 'late', a late fee, and interest on the next months charges followed. A remarkably dumb mistake, I set up an auto-pay from my checking, for $200, paid mid-cycle, so at least I'd avoid a 'missed payment'. (And yes, to your warnings, we all make mistakes) Jul 26, 2018 at 15:03
It is a total PITA to manage. If they'd make it easy, they might miss out on some revenue.– Pete B.Jul 26, 2018 at 15:10
2@PeteB: In some places they do make it easy (eg the UK). I just have a direct debit set up so that when the statement amount is due it gets transferred in full from my current account.– ChrisJul 26, 2018 at 17:20
@JoeTaxpayer also in UK - you get a statement with an amount on and the date you have to pay by (which is about a month after the statement date). If something else happens that is on your next statement - so I do not see how this confusion occurs.– mmmmmmJul 27, 2018 at 10:48
I have credit cards with three major banks, and neither of them support directly what you are trying to accomplish, so I guess the answer is 'Not possible'.
I think the best approach is to scroll back through the transactions, and add up what you already paid in the billing period. If you make the amounts even (like multiples of 100), it shouldn't be too big a task to add them up in your head, and find the remaining amount. If in doubt, pay a bit more.
I have a credit card through chase, and they let you see both. I wasn't aware it isn't a common feature.. Jul 26, 2018 at 21:29
@BlueRaja-DannyPflughoeft - I have Chase too, but haven't seen this. I'll go check again.– AganjuJul 26, 2018 at 23:31
I do have 1 card that actually does this, which is with CitiBank. Every time I make a payment, it notes how much of the last statement balance is still due. If your bank doesn't offer this, then really your option is just manual tracking. I have a few credit cards, and have always wanted this to be a feature on all of them. However, that's not really in the card company's best interest, other than letting you know if you've paid the minimum balance.
For my other cards, I just keep track in a text file on my computer. It's not a spreadsheet or anything fancy, and I overwrite it constantly. In this example, my statement balance was 200, total current balance is 350, and statement balance due date is 8/20. The 50 and 75 are payments I made to it.
Credit Card A due 8/20: 200 / 350 PAID 50 7/25 PAID 75 7/15
Every time a new statement comes out, I just update it. Whenever I make a payment, I just tack it onto the end of the row until I've met the statement balance.
For the questions about why I do this, rather than just paying it all at once, it comes down to a budgeting method I personally like to use. I use my cards for utilities, groceries, etc. I also use personal cards for work purchases which I get reimbursed for (points and more points!) I get reimbursed quickly, and want to just pay that money to the card rather than have it sit in an account and potentially get accidentally spent if I make a mistake. I, likely much like Chris, have just found that sometimes a partial-payment approach is just a bit more comfortable for me.
1I'd use a spreadsheet, one day you might want to appreciate beeing able to track your spendings. Nice to have a record of years already. With a little more work you could add categories and more information easily whenever you feel like it. Jul 27, 2018 at 6:51
@DonQuiKong - True, but a spreadsheet for this particular purpose is a bit overkill. If I want transactional, historical data, I would just do a transaction export from the website. The goal here is just to know, in the now, where am I on my balance due? I, personally, use a site similar to mint.com that allows me to categorize everything and keep track of monthly budgets. What it doesn't do, however, is compare payments made to statement balance remaining. Jul 27, 2018 at 12:39
The easy way to manage it is to make one payment per month, for the entire amount of the statement balance. Obviously before the due date. That's how I normally handle my credit cards. When I get a statement, it says I owe $X, so I pay $X. Simple, easy, end of story.
If you pay off your balance in full each month, then you pay zero interest, so there's really no reason to make multiple small payments. Just save up your money and make one big payment.
If you DON'T pay off your balance in full each month, different story. Then making small payments as you get the money will save you something on interest. Even if you're paying 20%, by paying something 2 weeks earlier you'll save 2/52 x 20% = about 3/4 of 1% of the amount you paid. So if you paid $100, you save 75 cents by paying halfway through the month rather than the day before the due date. Not a lot, but every penny helps, especially if you're in a tight situation.
In that case, no credit card that I have gives any helpful information on their web site. They list my payments but nothing clearly says which payments were for the current statement and which were for previous statements. The only way to manage it is to keep track of it yourself. But not that hard.
Here's how I do it: I have an in box on my desk where I keep all unpaid bills. When a bill comes in, I put it in the in box. When I pay it, I file it away. So with a credit card bill, if I make a partial payment, I simply write the amount of the partial payment on the bill and put it back in the in box. Then the next time I go to pay bills, I pick up this bill, it says, say, statement balance $500, I have written that I paid $200, so I must owe another $300. Not a high tech solution but simple and effective. (I'm a software developer. I develop web sites for a living. I've written my own accounting software that I use to manage my personal finances because I didn't like commercial packages I've bought. But I don't use a computer when it's easier to use pen and paper. Just like, I own a car, but I don't use my car to visit my next door neighbor, because it's easier to walk.)
By the way, just to make sure that a careless mistake doesn't cost me late fees, I've signed up for auto-payment of the minimum due on most of my cards. Even if I pay in full, they still then take out a payment for this minimum. But big deal, it's like $20 each month that ends up getting applied to the next month's bill. If you're in a tight squeeze and you can't afford to pay that $20 early, then okay, don't get autopayment, just be very sure you make the payments on time.
The Chase app and website shows:
- Statement balance
- Current balance of posted transactions.
- Pending transactions.
Thus, I can compute my "true" current balance by adding my current balance to the (computed by Chase) sum of Pending transactions.
EDIT: exceptions to "true" are that gas stations make a $1 placeholder for pending transactions, and restaurants don't add the tip until it's posted.
(I pay my CC balance multiple times per month, too.)
Pending transactions don't always accurately reflect the dollar amounts of the listed charges. Another relationship that may be useful is "balance" + "sum of pending amounts" + "available credit" = "credit limit" Jul 26, 2018 at 17:44
You're right. The usual suspects are gas stations making a $1 placeholder, and restaurants not adding the tip until it's posted. But it's Good Enough unless you're skirting your credit limit, but then you've got other problems.– RonJohnJul 26, 2018 at 18:48
I don't know which card you have, but Discover lets you track your outstanding statement balance. Look for that wording in the payment section on your credit card's application or website.
From the question:
I usually make payments several times a month
Elaborating in the comments:
I don't like paying one huge payment at the end of the month
Like it or not, you gain no financial advantage from making early part-payments on your credit card. Indeed, you are losing any (albeit trivial) in-credit interest you could be earning on the amounts you pay the bill with.
It's understandable, though, that you like how multiple payments work from the side of the account making those payments. If you can't spend all of your mid-month balance because some of it's going to be needed for the credit card bill, making a payment is a great way to help keep track of how much you have left for other spending.
Maintain this advantage without making your credit card account confusing to follow by opening a new account for making the payments. Set up a direct debit to pay off the credit card bill in full when it's due, and make your part payments into this account at your leisure. Then, the two numbers you need to know become readily accessible - the amount of your last credit card bill and the balance in your new bill-paying account. Just make sure that your account balance has reached the amount of the last bill before the date of your direct debit and you will know you are in the clear.
Probably best to factor in some buffer amount, say $100, in case you mistype a transfer amount or forget to do a transfer for one of your purchases. Unless overdrafts are free. Jul 27, 2018 at 15:48
@CactusCake the question specifically concerns the ability to check the current status. Allowing buffers is indeed often a good practice but you could just as easily make a buffer payment directly to the credit card for the same reason and with the same effect. I don't think it's really relevant to the issue at hand.– WillJul 27, 2018 at 15:53
I don't disagree with your answer, but I think adding buffer protection is relevant whenever you introduce additional manual steps (opportunities for human error) to an existing process, which using multiple accounts would certainly do. Jul 27, 2018 at 16:00
@CactusCake this doesn't introduce additional manual steps. The manual transfers are displaced from going
Current -> CCto going
Current -> New Account. The direct debit out of that account is automatic (and for many banks also adds an extra warning with a chance to make a correction by the end of the working day if manual error leaves too little in the account)– WillJul 27, 2018 at 16:08