What is Credit Card Billing Cycle and How it Works ?

If this is your first time using a credit card or applying for it, the idea of billing cycles might seem a bit confusing. Moreover, you might have noticed that the billing cycle is not the same for every credit card, which may have confused you even more. So, here’s explaining a credit card billing cycle in detail and putting all your confusion to rest.

What exactly is a credit card billing cycle?

The credit card billing cycle, which is also called the credit card statement cycle, refers to the period for which the bills are generated. Every transaction that is carried out in this period will be mentioned in the card statement for the month.

For instance, when the billing or statement date of the credit card is the 4th of each month, the billing cycle will typically start from the 5th of the previous month to the 4th of the present month. Every payment, cash withdrawal, and purchase made by you during this period can be tracked in the statement when the billing cycle ends.

Let’s say the credit card statement

was generated on March 6. It has all the transactions completed between February 5 to March 6. All transactions after the mentioned statement date, i.e., March 6, will be taken into account in the billing statement of the next month. The credit billing cycle not only differs from one bank to another but also varies from one customer to another. For example, the billing cycle for ICICI Bank credit cards differs from one user to the other. In fact, the bank even lets the users change and choose their billing cycle online.

Credit card statement date or billing date

The statement date or billing date refers to the date on which that statement is generated each month. Typically, it is the final day of the billing cycle for any given month. All transactions done through the card after the billing date is reflected in the succeeding billing statement.

Calculating the payment due date for credit cards

Simply stated, the minimum payment or minimum due refers to the least sum of money to be paid each month before the credit card due date towards the outstanding bills on your credit card. Late fee charges or negative points are not triggered when you keep on depositing the minimum payments due towards the card balance. However, interest on credit cards increases on the outstanding dues.

What is the minimum amount due on a credit card?

When you are unable to pay the entire outstanding amount on the card for a particular month, you have the option to pay a smaller portion of your due in order to avoid the late penalty. A small part of the amount, which is technically known as Minimum Amount Due (MAD), gets decided by the credit card issuer. MAD is mentioned in the credit card statement for the month.

The endnote

Hopefully, you will find it easier to understand your credit card statement now that you understand the billing cycle and other related details. In any case, remember to pay your credit card dues every month without fail to get the most benefits out of your card.

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