What Does A Credit Card Balance Represent?

by Garima Sharma

Credit Card Balance is the amount of money that a credit card user owes to the credit card issuer. A new credit card balance sometimes takes up to 24 hours for updation, post payment processing. The time taken for updation depends mostly on the credit card company and the payment method used by the credit card user.

Balance can be:

Positive Some Payment is still due to be cleared
Negative Payment has been made in excess i.e. greater than the due balance
Zero All dues are clear and no outstanding is there.

A breakdown of Credit Card Balance

The best way to credit management is a zero credit card balance. As it helps to avoid higher interest rates that come along with a positive balance. In case you are having a positive balance, then pay in excess in regards to the minimum monthly payment, thereby making yourself eligible for less interest amount that you owe to the credit card company. 

A credit card balance is the amount that one owes to the credit card company, based on the unpaid purchases. Balance includes:

  • Recent purchases
  • Unpaid balance
  • Interest charges
  • Annual fees &
  • Any other fees : Late payment fees or Inactivity fees.

Note: Every new purchase one makes is added to the balance and proportionally reduces the available balance for consumption.

How it reflects on Credit Score?

Credit card usage in principle is using the credit card company’s money to make purchases. Moreover, cardholders pay for current purchases in the future.

The basic working concept behind the calculation of a credit card balance is:

  • Determination of the report date
  • Date an account is reported to the credit card agency &
  • Payment of bills prior to the report date

All this contributes to a good credit score.


Credit card balance is something that is very crucial to creating a good credit score. And clearing the dues in time or before the grace period expires plays an important role in the process.


Read More: Credit Card Expiration Date Finder

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