Billing Cycle for Credit Card

What is the Credit Card Billing Cycle

The time period for which a credit card statement is generated is typically referred to as the credit card billing cycle. It typically ranges from the closing date of your last month’s credit card statement to the closing date of your current month’s statement. This time period can be anywhere from 27 to 31 days, depending on the month for which the statement is generated. 

How Does the Credit Card Billing Cycle Work

Now that you know the meaning of a billing cycle, let’s take a look at how it works. Credit card issuers generate a statement every month, on a particular day. 

So, let’s say that the credit card bill generation date is the 13th of every month. This statement consists of details of all the credit and debit transactions that occurred from the 14th of the previous month up until the 13th of the succeeding month. That’s how the billing cycle works.

How to Change Credit Card Billing Cycle or Billing Date?

As per the directives of the Reserve Bank of India, you can choose to change your credit card billing cycle. To make use of this feature, all that you need to do is get in touch with your credit card issuer via email or by calling their customer care number. However it should be noted that this change can only be made once.

 It is advisable to reach out to your credit card issuer through the registered mobile number or the registered email ID. This will make it easier for the card issuer to verify your identity. 

What is the Credit Card Bill Payment Due Date 

The last date for payment of all your outstanding dues as per the statement generated is the credit card bill payment due date. Typically, credit card issuers set the due date anywhere from 20 to 25 days after the statement is generated. 

Here’s an example to help you understand the concept of credit card due date better. 

Let’s say that a statement is generated against your credit card on the 13th of May. And your due date is around 20 days from the statement date. So, the last date for payment of your dues would be the 2nd of June. 

What is the Minimum Amount Due and How is it Calculated?

The minimum amount due is the minimum amount that you would have to pay on or before the due date to keep your credit card account active. In addition to keeping your card account active, paying the minimum amount due can also help you avoid penalties for late payment. 

That said, paying just the minimum amount due will cause you to lose the interest-free period on your credit card. This effectively means that interest will start accruing on your total unpaid outstanding amount till the time you choose to completely clear all the dues. 

The minimum amount due is usually a percentage, say about 5%, of the total outstanding dues. If you have any loans on your credit card, the EMI for that loan is also added to the minimum amount due. Here’s a quick example of how the minimum amount due is calculated. 

Say that you used your card to purchase products worth ₹50,000 and that you also have a loan on your credit card for which the EMI is ₹2,500. Now, the minimum amount due that you would have to pay on or before the due date to keep your card active would be ₹5,000 [(₹50,000 x 5%) + ₹2,500].

Important Points to be Considered for Credit Card Billing Cycle

Before you apply for a credit card, you need to keep certain important things about the credit card billing cycle in mind. Considering such essential aspects and being mindful of the important dates can help you repay your dues promptly and avoid the downsides of delayed credit card repayments. This includes higher interest charges and a decrease in your credit score. 

So, here are some important points to consider and remember with regard to the credit card billing cycle. 

• Variation in the Billing Cycle 

The credit card billing cycle is not the same for all cards. It varies from one credit card issuer to another, and also between different credit cards offered by the same issuer. Generally, most credit cards have a billing cycle that is anywhere between 27 and 31 days long. However, while the length of the billing cycle may vary across credit cards, it remains fixed for each card. 

This effectively means that the length of the billing cycle for any credit card remains the same, no matter how many days there may be in a month. For example, if your credit card has a billing cycle of 30 days, it will continue to remain so for months with both 28 and 30 days.  

• Checking Your Credit Card Billing Cycle Details

Since the details of the billing cycle is specific to each card, you need to be aware of the terms related to your credit card. This will allow you to plan your purchases and your repayments in a manner that is convenient for you. You can easily check the details of your credit card billing cycle in your credit card statement. It is typically mentioned in the first page itself.

Alternatively, you can also contact the helpline number offered by your credit card issuer. This will allow you to directly speak to a customer support executive and request the details of your credit card billing cycle. 

• The Due Date in the Credit Card Billing Cycle

Every credit card billing cycle has a due date by which time you need to pay the dues incurred during that cycle. This due date is generally set at around 21 to 25 days after the end of the billing cycle. This window of time is the grace period during which no interest charges are levied on the amount outstanding. 

However, if you fail to pay the amount due within this window, by the due date, you will start to incur interest on the unpaid balance. Furthermore, any new purchases you make using your credit card will also begin accruing interest if you have unpaid dues from the previous credit card billing cycle.

Impact of Credit Card Billing Cycle on Credit Score

Wondering how your credit card billing cycle can affect your credit score? Following are some of the ways your credit score can be impacted:

• Every few months the credit card issuer is mandatorily required to share your billing details with the credit bureaus. In case you fail to pay or delay your payment, the fiscal reliability is adversely affected which has a direct bearing on the credit score.

• If you have a habit of repeatedly surpassing the monthly credit limit, it is not a good sign and you appear as a liability to the creditors.

• In case you are frequently unable to pay even the minimum amount due by the due date, it can severely impact the credit score.

• It is crucial to understand the billing cycle so that you can make the credit card payments on time to avoid negatively impacting the credit score.