A Credit Card Balance Represents

by Banking Desk
Credit Card Statement

Today everyone owns a credit card. So we are well aware of the term “Credit Card Balance” but some of us are in debt of the dues. So before you think of making a payment of your dues next month know what your balance represents.

What is a Credit Card Balance

It 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 updating 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 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 a minimum monthly payment, thereby making yourself eligible for less interest amount that you owe to the credit card company.

A credit card balance is an 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.

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK Read Privacy & Cookies Policy