DEFINITION of 'New Balance'

The amount you owe on your credit card at the end of the billing cycle. The new balance is the sum of your previous balance, payments, other credits, purchases, balance transfers, cash advances, fees and interest. The new balance appears in the summary of account activity on your credit card statement.

BREAKING DOWN 'New Balance'

The following chart shows where to find the new balance on your credit card statement and how it’s calculated:

Summary of Account Activity

Previous Balance

$1,000.00

Payments

-$1,000.00

Other Credits

-$125.00

Purchases

$800.00

Balance Transfers

0

Cash Advances

0

Past Due Amount

0

Fees Charged

0

Interest Charged

0

New Balance

$675.00

Credit Limit

$3,000.00

Available Credit

$2,325.00

In this example, the consumer’s last statement balance was $1,000, which she paid in full. She also got a $125 credit for some purchases she returned. She then made $800 in new purchases, for a new balance of $675. If she pays the $675 by the payment due date, she won’t be charged any interest or fees on her next statement.

This sample account summary represents the activity of someone who pays off her balance in full and on time each month and only uses her card for purchases, not balance transfers or cash advances. As a result, this consumer doesn’t incur any interest charges or fees. She has also kept her spending well below the credit limit, which is good for her credit score.

The new balance is basically a summary. To get the details of the transactions that make up your new balance, you’ll need to examine the transactions section of your statement. There, you’ll be able to see each individual purchase that contributes to your new balance. You should examine your transactions carefully to make sure that you recognize all of them and the amounts are correct. If there are any fraudulent charges, you should notify your credit card issuer so they can remove the charges from your account and possibly issue you a new card and account number. If there are any incorrect charges, you should first contact the merchant to get them corrected. If that doesn’t work, you can initiate a dispute with the credit card company.

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