What's the difference between current balance and available credit?

The current balance on a credit card is the amount you owe on your account, minus any pending purchases or payments. All of the purchases you’ve made that have been processed by your credit card company since you last paid your bill are included in the current balance.

On a credit card account summary, you’ll likely see “Current Balance,” “Pending Balance,” and “Available Credit.” Pending balance refers to transactions that are being processed and may not be reflected in your current balance yet. Available credit refers to your total credit limit minus your current and pending balances. Essentially, available credit is how much of your credit you can still spend before making a payment.… read full answer

To make it simpler, picture it like this:

Credit Limit - Current Balance - Pending Transactions = Available Credit

For example, let’s say you have a credit limit of $5,000, your current balance is $1,500, and there’s a pending balance of $500. Your current and pending balances add up to $2,000. Subtract that from $5,000, and you have your available credit: $3,000.

Every time you make a purchase, the amount will be subtracted from your available credit. Every time you make a payment, your available credit will increase by the amount of the payment once it processes.

Another type of balance you’ll see on your account summary is a “Statement Balance.” The statement balance is what you owe as of the date each billing period ends. This is when your monthly account statement gets generated. Your current balance will be higher than your statement balance if you make additional purchases but no extra payment between the end of the billing period and your due date. You must make at least the required minimum payment by the due date to keep your account in good standing.

Available credit is the remaining amount of your credit card’s credit line that you haven’t spent yet. You can find your available credit on your monthly account statement or by logging in to your online credit card account. It’s important to be aware of how much available credit you have because if you try to spend more than that amount, your card may be … read full answerdeclined.

To calculate your available credit, the card issuer starts with your full credit limit. Then, your current balance – i.e. the amounts of any purchases, fees, and interest you currently owe, minus any payments you’ve made toward your balance – is subtracted from your credit limit. This leaves your available credit.

Here’s an easier way to visualize available credit:

Credit Limit – Current Balance = Available Credit

Available credit isn’t only calculated once a month, of course. It changes every time your current balance changes. For example, when you make a payment on your credit card, your available credit increases. When you make a purchase with your card, your available credit will decrease.

It’s worth noting that the less available credit you have, the higher your credit utilization on that credit card will be. And if your credit utilization stays high, that can spell bad news for your credit score. Make sure to keep your overall credit utilization below 30% to maintain your credit standing.