Billing Cycle for Credit Card

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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?

According to the rules and regulations issued by the Reserve Bank of India, cardholders can choose to change their credit card billing from July 01, 2022 onwards. 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. 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].

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.

FAQs About Credit Card Billing Cycle

  • ✔️How is the Minimum Amount Due calculated for a credit card billing cycle?

    The Minimum Amount Due (MAD) can vary depending on the credit card issuer. That said, most issuers set the Minimum Amount Due as 5% of the total outstanding amount for that month. So, if the total outstanding for that month is Rs. 10,000, the Minimum Amount Due would be Rs. 500.

  • ✔️What is the credit card billing cycle?

    The period of time for which a credit card statement is generated is known as the billing cycle in credit cards.

  • ✔️How is the credit card billing cycle calculated?

    If the statement generation date is the 6th of every month, then the credit card billing cycle would be calculated from the 7th of a month to the 6th of the succeeding month.

  • ✔️Can I pay the credit card bill before bill generation?

    You can make payments towards the outstanding amount on your credit card before the bill generation. This payment that you make will be adjusted against the total dues on your card when the credit card statement is generated.

  • ✔️How do credit cards generate bills?

    Credit card issuers generate statements by compiling all the debit and credit transactions that occurred on your credit card during the billing cycle for the credit card.

  • ✔️What is the statement generation date of a credit card?

    The credit card bill generation date tends to vary from one credit card issuer to another. To get a better idea of what the statement generation date is for your card, it is advisable to get in touch with your card issuer.

  • ✔️What is the best time to pay a credit card bill?

    The best time to pay your credit card bill is on or before the credit card due date. This way, you can avoid penalties and interest, and protect your credit score.

  • ✔️Does my credit card billing cycle affect my credit score?

    No. The billing cycle for your credit card doesn’t affect your credit score. However, if you miss making any payments, partial payments, or pay only the minimum amount due, your credit score may get affected negatively.

  • ✔️Where can I find credit card billing date and payment due date?

    You can find the billing date and the due date for payment by logging into your credit card account. Alternatively, they’re also present on the credit card statement issued to you.

  • ✔️Is there any interest levied in case I pay only the minimum amount due?

    Yes. If you pay only the minimum amount due on your credit card, the remaining unpaid outstanding dues will start to incur interest applicable for your card. The interest will continue to be levied on the outstanding amount till the time it is fully cleared.

  • ✔️When should I pay my credit card bill on or before the due date?

    It is advisable to pay the credit card bill before the due date specified on your credit card statement. However, you may choose to pay your dues on the due date as well. Failing to clear all your outstanding dues on or before the due date can lead to a penalty and interest being levied on the amount due.