Credit card billing cycle: What is it and how does it work? All you need to know
The credit card billing cycle plays a key role in determining your credit score. Two primary factors influence your credit score: your payment history and the credit utilisation ratio. These elements are directly affected by the timing of your billing cycle.
Credit card billing cycle: In today's time, the number of people using credit cards is in the millions. Despite this, every day various banks offer new credit card plans. However, very few people pay attention to the billing cycle before applying for a credit card, even though it can have a significant impact on your financial management. Let's take a look at why it is important to carefully choose your credit card billing cycle and what date is ideal for you.
A credit card billing cycle is the period between two statement dates, usually lasting around 30 days. During this cycle, the bank tracks all purchases, cash advances, and any fees associated with transactions. At the end of the cycle, the bank generates the bill based on these transactions.
Importance of choosing right billing cycle
- Keep your credit card billing cycle during a period when you have enough money to pay the bill. This could be a day or two after you receive your salary. Therefore, choosing the right billing cycle can help you easily manage paying your bill.
- When your billing cycle aligns with your payday, you are able to manage your budget better and plan your expenses more effectively.
- Choosing the right billing cycle helps you avoid the hassle of penalties. You can easily make the payment on time and steer clear of late fees.
- Improving your billing cycle allows you to manage multiple credit cards more easily.
How to change your credit card billing cycle?
To change your billing cycle, contact the bank that issued your credit card. After receiving your request, the bank will collect the necessary information and adjust your billing cycle accordingly. Choosing the right billing cycle can help you better manage your payments, avoid late fees, and optimise your credit card usage for your financial benefit.
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