Credit Card Billing Cycle

Credit card podcast by raman

A credit card billing cycle is simply the time period between billing statements. The length of your billing cycle varies from issuer to issuer and may range from 27-31 days. At the end of your billing cycle, your statement is compiled by your credit card provider and you have until your due date to make the payment.
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Let us understand this with a simple example:

Assume your credit card statement is generated on the 6th of each month. Your credit card billing cycle will begin on the 7th of the previous month and will end on the 6th of the current month. During this time, all credit card transactions will appear on your monthly credit card statement. This includes all credit card payments, cash withdrawals (if any), and ongoing credit card EMIs. In this example, we have considered the billing cycle to be of 30 days, but it may vary depending upon the type of card and your credit cad provider.

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.