A credit card billing cycle, which is often set on a monthly basis, is the time between billing periods. Throughout this cycle, credit card transactions post to your account and change the balance you owe. At the end of your billing cycle, your issuer will charge you for any unpaid transaction made in the previous billing period.
During your credit card billing cycle, your issuer posts all financial transactions to your account. Purchases, balance transfers, installment charges, finance charges, and fees are added to your outstanding balance, while payments, rebates, and credits are deducted from your balance. Your issuer will bill any unpaid charges and fees at the end of the billing cycle.
How Long a Credit Card Billing Cycle Is
Credit card billing cycles typically range between 27 to 30 days. Credit card issuers usually determine billing cycles upon approval. Some billing cycles start on the day you open your account while others are set to monthly, which starts on the first day of the month and ends on the last day of the month.
Monthly billing cycles may also start on any day of the month. For example, let’s say your credit card billing statement date is on the 10th of every month. This means your billing cycle starts on every 11th of the month and ends on the 10th of the following month.
However, if your billing cycle is set to a certain number of days rather than monthly, your billing statement date varies. For example, let’s say your billing cycle is 28 days. If your latest statement date is March 4, your next billing cycle starts on March 5 and ends on April 1. You can calculate the end of your next billing cycle by counting 28 days, starting with April 2.
How Credit Card Billing Cycles Work
Your billing cycle begins when you activate your new credit card. Your credit card balance usually starts at zero unless the credit card issuer charged you with upfront fees, or you made a balance transfer to your new credit card. Before you get a new card, you should first learn how a billing cycle and credit card works to avoid mistakes that may damage your score.
Payment Due Dates and Grace Period
Your payment due date is typically within 21 or 25 days after the statement date and sets the expectation of when you must pay your outstanding balance. This period is also known as the grace period, which is the amount of time between your billing statement date and your payment due date. You are expected to pay at least the required minimum by your due date to avoid late payment fees.
The balance you pay within the grace period will not incur finance charges. Interest only applies to unpaid balances after your due date. However, not all transactions qualify for a grace period. Cash advances, for instance, are automatically charged with interest.
Potential Financing Charges
A finance charge, or interest, applies to any balance you carry from the previous billing cycle. Interest can also apply to installment transactions that are not made under a 0% interest promotion and to cash advances. Interest is calculated in each billing cycle using your credit card’s annual percentage rate (APR) and credit card balance. The back of your credit card billing statement usually explains how the issuer calculates your finance charge.
Minimum Payments and Late Fees
You don’t have to pay your full outstanding credit card balance every month. Credit card issuers only require you to pay the minimum balance each month, which is a small percentage of your total balance. The required minimum payment is shown on your credit card billing statement, which should be paid on or before the payment due date.
If your payment is less than the minimum or if you fail to make the required minimum payment by the due date, your issuer will charge a late fee. If you fail to make a payment for more than 30 days, your account will be considered past due, and a late payment notice will be added to your credit report.
Introductory APRs and Their Credit Card Billing Cycles
Introductory APRs are used as a promotional strategy by most credit card issuers, which allow new cardholders to access an introductory interest-free period. These APRs can last for up to 21 months and apply to purchases or balance transfers, or both, depending on your credit card. It’s important to know when your introductory rate expires, so you can repay your balance before the regular APR kicks in.
Where to Find Your Credit Card Billing Cycle
You can typically find your credit card billing cycle information in your credit card’s terms. If you have trouble, the best way to find your credit card billing cycle is to check your most recent credit card billing statement and count the number of days between the beginning and the end of your previous billing cycle.
For instance, let’s say your billing cycle is from April 18 to May 19. The number of days between the beginning and the end of your billing cycle is 32. You can determine the end of your next billing cycle by counting 32 days, starting with May 20. Your next billing cycle will end on June 20.
How Credit Card Billing Cycles Impact Your Credit
Your payment history and credit usage make up a large portion of your credit score. If you fall behind on your payments, you will hurt your credit score. However, if you maintain a perfect payment history, you can help improve or build your credit score.
Credit card issuers typically report your credit card activity at the end of your billing cycle. This can be useful when you are trying to improve your credit as it allows you to plan your payments and credit card usage strategically.
Your credit card billing cycle is typically around 27 to 30 days, depending on your credit card issuer. During this time period, your transactions will post to your account and either add or subtract from your credit card balance. At the end of your billing cycle, any unpaid balances are due. However, you’re only required to pay the minimum payment.