Know When Your Payment’s Due: Understanding Your Credit Card Billing Cycle
Credit cards let you borrow money from the banks up to a predetermined limit, making it convenient to purchase goods or services without worrying about the funds. Credit cards offer various benefits but can also cause trouble if used recklessly. You must pay your dues to avoid penalties and balance your expenses. Here, the credit card billing cycle comes in.
Keep reading this article to understand a credit card billing cycle and how to increase your credit card limit.
What is a Credit Card Billing Cycle?
The Credit card billing cycle is the specific timeframe during which a bank compiles the transactions made by a cardholder. This period is usually one month, but the exact duration can vary depending on the bank. The credit card billing cycle is essential in determining the cardholder’s statement, minimum payment, and the due date.
For example – Suppose your credit card statement gets generated on the 10th of each month. Your credit card billing cycle will start from the 11th to the 10th of each month. Your monthly credit card statement will include a record of all the purchases during this time.
How Does a Credit Card Billing Cycle Work?
● Start date: Your credit card billing cycle starts from the day it is activated. On the first day, your billing account appears to be zero. All your transactions start getting recorded from this day onwards.
● Transaction period: A credit card billing cycle lasts about a month. During this time, all your transactions get recorded. Whether you purchased goods or services or transferred funds, all these activities get recorded in your credit card statement.
● End date: The credit cycle ends on a predetermined date. The bank then issues a statement with a detailed structure of your financial activities during this period.
How can you find your Credit Card Billing Statement?
You will receive your credit card billing statement on your registered email or can collect the same from your nearest bank branch.
Credit Card Billing Cycle Minimum Due Amount
The minimum amount a cardholder must pay by the deadline set by their bank to keep their account open and in good standing is the minimum due on a credit card. The minimum payment amount is between 5% and 10% of the total amount owed, just a minimum portion of the outstanding credit card bills.
What Happens When You Don’t Pay Your Credit Card Bill on Time?
1. Affects your credit score: Your banks report late payments each time you fail to pay your credit card dues. It harms your credit score and makes it more difficult for you to receive credits or loans in the future.
2. High-interest rates: If you fail to make the minimum amount on your credit card, the dues carry forward to the next billing cycle. If Interest charges are applied, they can quickly accumulate and create a debt cycle if not paid. Therefore, clear the entire amount due as soon as you can.
3. Late payment fee charged: Late payment charges may be imposed by banks if the minimum payment is not clear by the due date. These fees are an extra financial hardship that can be easily avoided by making on-time payments, and they might vary depending on the outstanding balance.
How to Increase Your Credit Limit
Many individuals require a Credit card limit increase. Here is how you can increase the same:
● Regularly use your credit card: Use your credit card regularly as it builds trust among banks. It will also ensure a healthy credit score, and banks will consider increasing the credit card limit.
● Be patient: Apply for a credit card limit increase, and patiently wait as banks will study your spending pattern and how regularly you use the credit card.
● Shift the increase: If you own multiple credit cards issued by the same bank, you can request the bank to shift the limit for one card to another. The final decision depends on the bank.
● Apply for a new credit card: If nothing works, you can apply for a new credit card with a higher credit limit.
What to Keep in Mind for the Credit Card Billing Cycle
● The period between the start and end dates is an interest-free period.
● The credit card billing cycle lasts about 28-31 days.
● The period between your billing cycle and the due date is a grace period.
● Your credit card billing cycle is available on the first page of your monthly report.
Conclusion
As a credit card user, you must understand all the concepts, rules, regulations, and terminology imposed by the government. Smartly use your credit card to build credibility among the banks and financial institutions.
Get a Kotak811 credit card to avail great benefits and flexible repayment modes.
