Credit Card Statement Balance Explained FAST (Payment Basics 2/4)

So when it comes to credit cards, obviously they are very easy to use and they're extremely convenient. But when it comes to actually paying them, it can be a little bit confusing for newer credit card users because there's a lot of terminology out there that we need defined so we can understand what we're actually doing. So I'm gonna make some of these short videos. We're just gonna define some of these basic terms when it comes to credit cards and the videos aren't gonna take very long. Now, if you just happen to find this channel, I'm Jason with Honest Finance and I make a lot of videos on different financial topics. So feel free to check out the channel if you have an interest. Also, I am gonna leave a card right up here for you guys that's gonna link to the playlist on all of the credit card definitions. So if you guys wanna watch more of those, check that out at any point, but now let's move on. So when it comes to your statement balance, this one can be a little bit confusing because you've gotta understand where it's coming from. Basically what's happening is you have a billing cycle that's generally about 30 days long and anything within that window, we're talking purchases or returns, they're gonna be inside the billing cycle and then once the cycle ends, then you're gonna be given the statement balance and this is gonna include all of your purchases, all of your returns and if you're accruing any interest or fees, that's also gonna be tacked on to that bill. So your statement balance is basically what you owe and you're gonna be given about 25 days for a due date so that you have plenty of time to get that ready and paid off by the time it's gonna be late. Now what you do need to understand about the statement balance is it's one of the most important payments that you can make on your credit card because if you pay off your statement balance in full every single month by the due date, then you're never gonna have to pay any interest on your credit card. So if you wanna have everything interest-free, just pay it off every single month by the due date, absolutely in full and you never have to worry about paying any interest. So basically if you have $1,000 statement balance and it's due by the 15th, then just make sure to pay off that full 1,000 bucks by the 15th and you never have to worry about paying any interest. But if you happen to pay any less than that $1,000 by the due date, then you are gonna start accruing interest. So let's say that you paid $999 instead of 1,000, well just that $1 left over, now you're gonna accrue interest on that dollar but you're also gonna lose your grace period going forward and the grace period is just the gap between when the closing date ended and when the due date is. So between about that 25 days if you've made any purchases, you are gonna start accruing interest on those purchases going forward. So make sure that you pay off your statement balance in full completely every single month by the due date and you don't have to worry about paying any interest. Now if you are paying interest on your credit card because you can't pay off that statement balance in full every single month, don't worry, just try and stop using your credit card if you can do that and get that statement balance low every single month going forward so that eventually you can pay it off in full because once you pay it off in full two months in a row, then you're gonna be interest free again and going forward as long as you can continue that, then you don't have to worry about ever paying any interest. So just remember that the statement balance is an accumulation of everything that happened within the last billing cycle plus any interest or fees if those applied to your credit card and then once you're given the statement balance, you're gonna be given about 25 days ahead of time which is your due date to get that sucker paid off or to make a payment towards it. Also, once your statement balance comes out, please make sure that you at least make the minimum payment by the due date in order to avoid any other problems because if you don't pay off at least the minimum by the due date, then you're gonna accrue late fees, a higher interest rate on the credit card and even worse, you can have a ding on your credit report for making a late payment which is really bad and it can really hurt your credit score. So even though the minimum payment is a total ripoff on your credit card, just make sure to at least pay that by the due date in order to avoid any other problems. And if you're ever in the market for a new credit card, be sure and check out creditcards.com. I've got an affiliate link for them in the description below. So go ahead and check them out if you have an interest because they have a very large selection of extremely competitive credit cards and basically, you can just compare which ones are gonna be better for you as far as your spending goes and then you can just go from there. But thanks for watching this video. Hopefully, you guys learned something new. Have a great day.