Credit cards are a terrific asset in today’s digital world. However, no matter how convenient they are as contactless tools, it’s important to understand some basic aspects of credit cards and their use, including your credit card billing cycle. This is essential if you want to get the most out of your card.
There are so many terms that cardholders have to gain familiarity with, it’s a challenge to know all of them at the back of your hand. One of the most advantageous places to start knowing about what your credit card can do for you is the billing cycle.
As the name suggests, a billing cycle is the interval of time between the generation of two statements. It has to do with the amount owed to the credit card issuer for transactions made with the card.
Knowing about the specifics of this can help you save more, and avoid late payment charges and interest. Before you take on a card, it’s a good idea to know everything about the credit card billing cycle, and how it affects the credit card due date.
Billing Cycle Explained
A credit card billing cycle is also called a billing period. It is the duration between the closing date of your last bill statement and the next. Depending on your credit card issuer, your billing cycle typically lasts from a month to 45 days. For high-end cards, this can be longer.
The number of days in a billing cycle changes as some months have more days, but regulations in place affirm that they are as “equal” as is possible. Hence, your due date can vary by around four to five days.
You usually get a period of time to pay your bill from the end of your billing cycle and your credit card due date. This is called the grace period, and if you pay the total amount you owe during this period, you won’t incur any interest or fees.
Finding Your Billing Cycle
In your billing statement, you can easily find your billing cycle. You will notice that the start date and end date for your billing period are on the first page of your statement. This is located near the “balance” amount. Some card issuers mention the number of days in a billing cycle. If this isn’t the case, you can always do the calculation yourself. All you need to do is count the number of days from the opening date to the closing date. For instance, if the first day of the rbl credit card billing cycle is March 23 and the last day is April 20, the billing cycle would be 29 days long.
The Billing Cycle and Credit Score
Credit card issuers are bound to report your credit card information to credit agencies like Transunion CIBIL. This happens with each credit card cycle. During your billing cycle, whatever actions are taken by you, like new expenses, minimum payments or balance transfers, will be reported to the agency.
This will reflect on your credit report, and in turn, account for your credit score. For instance, if you pay only a part of your total bill by the credit card due date, that information will be sent to the agency. Similarly, if you exceed your card’s cash limit, this will be reported too. If you don’t make timely bill payments, you could end up with a low credit score.
Can You Change the Billing Cycle Dates?
You cannot really select billing cycle dates or durations, but you can adjust payment due dates, and this results in changes in your billing cycle dates. Card issuers may allow you to choose your due date, and you may want to consider dates that suit your payment needs. For instance, to regulate cash flow and make timely payments, most salaried credit cardholders pick due dates just after salaries are deposited in their accounts. This always ensures that funds to pay bills are available. Note that you cannot adjust your payment due dates regularly, and one or more billing cycles may pass before a new date is adjusted on your bill. The important thing to remember is to adjust your spending in such a way that you make your credit period long enough to have funds available, to pay your bill by the credit card due date.