Credit Card Billing Cycle

Your credit card due date is the last date until which you are supposed to clear your bill and it is usually after 15 to 25 days from the statement date. For instance, let us consider that your credit card statement is generated on the 6th of every month and your due date is the 26th of the same month. What this simply means is that you have to pay your dues till the 26th and no extra charges will be levied on paying within this time frame.

Now, if you are unable to pay the total due amount* or even the minimum due** within this time frame. You will be charged a late fee as well as interest on the due amount.

*Total Amount Due –Total amount due is the entire amount due for payment as on the statement date.

**Minimum Amount Due -Minimum amount due is a percentage of the total outstanding amount that you must pay to the bank if you are unable to pay the complete bill amount. Paying the minimum amount due by the due date prevents you from paying the late payment charges and being considered a defaulter by the issuer. However, interest is accrued on the remaining amount.

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Credit card interest-free period is the duration for which the amount used on a credit card does not attract any interest. It can also be understood as the duration between the first day of the billing cycle and the day on which the payment is due. Let us understand interest-free period with an example:

Statement Generation Date – April 6th
Due Date – April 26th (After 20 days)

So, here the statement generated on April 6th has all the transactions that occurred between March 6th to April 5th. Let us take into consideration, 5 transactions that took place before the bill was generated on April 6th.

1. March 16th – Rs, 1,500
2. March 7th – Rs. 2,500
3. March 31st – Rs. 10,000
4. April 2nd – Rs. 1,000
5. April 4th – Rs. 1,200

Since the bill was generated on the 6th of April, the above transactions did not incur any additional charges until then. Taking into account the transaction that took place on March 7th, no additional charges were incurred for 50 days (24 days of March + 26 days of April). This entire period of 50 days is the interest-free period for this particular transaction. In the same manner, the interest-free period for all other transactions can be calculated:

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Do All Credit Cards Have the Same Billing Cycle?

No, all credit cards do not have the same billing cycle. Each card has its own billing cycle, which is shared with you when the card is issued. You can find this information in the welcome kit or card documents, and many banks also communicate it via SMS or email.

What happens if I make a purchase right after the billing cycle ends?

If you make a purchase right after your billing cycle ends, it will be included in your next billing cycle. For example, if your billing cycle is from 20th March to 20th April, statement will be generated on 20th April. Now, a payment made on or after 21st of April will be added to your next statement, that is, 20th April to 20th May, and will be due in the next month.

How does the billing cycle affect interest charges?

Your billing cycle is the period for which your credit card transactions are recorded, and the due date falls around 7-15 days after the statement date (varying from card to card).
If you pay your total amount due on or before the due date, no interest is charged. However, if you carry a balance beyond the due date, interest starts accruing. So, understanding your billing cycle and due date helps you plan payments and avoid interest charges.

Does Changing the Billing Cycle Affect Credit Score?

Changing your billing cycle does not have a direct impact on your credit score. However, if aligning the billing cycle with your cash flow helps you manage repayments more effectively, it can lead to timely payments, which can positively influence your credit score over time.

How can I know my credit card billing cycle?
Your credit card billing cycle is shown on each month’s card statement. It is also mentioned on the welcome document which you received along with your credit card.

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Can I change my credit card billing cycle?
You may change your credit card billing cycle by talking to your respective credit card customer. However, as per RBI’s 2022 regulations, now the billing cycle can only be modified once. So, you must take your cash flow into consideration before getting the billing cycle updated as it cannot be modified again.

Should I pay my credit card bill on or before the due date?
You can pay the bill on or before the due date at your convenience. However, paying the bill later will incur additional charges.

What happens if I pay only the minimum amount due?
If you pay only the minimum amount due, your card issuer will start levying interest on the remaining amount. Moreover, all your new transactions will start accruing interest from the first day, as the interest-free period becomes ineligible when you have unpaid balance in your card account.