Pay Last Statement Balance or Current Balance to Avoid Credit Card Interest?

Do you pay last statement balance or current balance to avoid credit card interest? If you are a thrifty credit card user, then you know that paying your card off every month will help you avoid those sky-high interest charges. But if you have purchased lots of items, you may be confused as to whether or not you need to pay the “Current Balance” or the “Last Statement Balance” (or “Statement Balance”) to avoid interest charges. This article has the answer you need.

Which to Pay to Avoid Credit Card Interest? Last Statement Balance vs. Current Balance:

If you are looking for the short answer to the question: Statement balance is what you need to pay each month to avoid interest.  In general, most credit cards allow a grace period to pay your purchases off before they begin to accrue interest charges. This is great, and I love this feature about credit cards. But to avoid the interest, you MUST be sure to pay this amount off in full each month.

But I first became confused one month when I made several big purchases when my wife and I bought our first home. Naturally, I didn’t want to have to pay the full balance off if I didn’t have to. I also didn’t want to pay any interest, and would have been happy to pay it in full if the alternative was an interest charge.

So as I went to pay my bill, there was 2 different amounts I could pay: the Last Statement Balance, and the Current Balance. Hmm, this confused me. The statement balance was lower, and the current balance was much higher. So which did I need to pay, and why were the amounts different?

The difference in the amounts was due to the fact that the old statement had given the charges I made during that period. Since I had used my card since the last statement was printed, I had accrued new charges. Therefore, the total credit card balance (called current balance), was higher than the “Last statement balance.”

Since the current balance includes purchased I had just made, I didn’t have to actually pay those off because they hadn’t yet accrued interest (they were still in the “grace period”). All I was required to pay was the actual “Last Statement Balance” to avoid interest charges.

So, I payed the last statement balance in full, leaving a small balance on my card from purchases I had recently made. When I received my next credit card bill, I had not been charged any interest, even though I did have some charges left after paying the “Last statement balance.”

And to this day, I still just pay the “statement balance” in full, regardless of how much the current balance is. That way, I make sure I have avoided all interest charges from month to month.