If you’ve ever gotten a credit card statement in the mail, you’re probably familiar with the terms “total new balance” and “adjusted balance.” But what exactly do these terms mean? And more importantly, how do they affect you? Keep reading to find out.
Total New Balance
Your total new balance is exactly what it sounds like—the total amount of money you owe on your credit card for the current billing cycle. This figure includes any new charges you may have made, as well as any interest or fees that have accrued. In other words, your total new balance is the full amount that you will need to pay off by the due date in order to avoid being charged additional interest.
Your adjusted balance, on the other hand, is the total amount of money you owe on your credit card minus any payments or credits that have been applied to your account since the previous billing cycle. So, if your total new balance was $1,000 and you made a payment of $500 during the current billing cycle, your adjusted balance would be $500. Similarly, if you had a $100 credit applied to your account, your adjusted balance would be $600.
Generally speaking, your total new balance will be higher than your adjusted balance—unless, of course, you’ve already paid off your entire balance for the current billing cycle.
However, it’s important to note that some Credit Card companies use something called “double-cycle billing.” With this method, interest is calculated based on your average daily balance for both the current and previous billing cycles—meaning that even if you pay off your entire balance before the due date, you could still be charged interest on purchases made during the previous month. Thankfully, double-cycle billing is not very common nowadays. But it’s still something to be aware of.
As you can see, there’s a big difference between total new balance and adjusted balance—and it’s important to understand how each one is calculated in order to avoid being charged unnecessary interest fees.
So remember: your total new balance is the full amount you owe for the current billing cycle (including any new charges, interest, or fees), while your adjusted balance is the total amount owed minus any payments or credits that have been applied since the last billing cycle. Armed with this knowledge, you can make sure that you always know exactly how much money you need to pay off by the due date in order to avoid being charged additional interest.