Credit card Billing cycle- how billing cycle works is an obvious question by every new credit card applicant or holder.
What is the billing cycle of a credit card, this is a question that is not answered by most credit card users. A credit card consumer who has understood his credit card billing cycle will be able to manage his credit card correctly and will be able to save thousands of rupees each year because of his/her credit card.
Friends, whenever a person takes a credit card, there are two or three things going on in his mind, such as shopping will now be easy, now I will be able to take advantage of many offers which come on the card and will save a lot of money. But the opposite of what happens with most people
I often hear people in my circle saying that since I took a credit card, wasted a lot of money on the bill every month – very upset by paying Fine, interest and GST above that. it has made my financial condition worse Think I should close the card as soon as possible.
So if you or a friend of yours is stuck in the whirlpool of such a credit card, there can be two reasons behind it – the first reason is that the credit card is not used properly, and the second reason is that you or your friend did not understand the credit card billing cycle correctly.
Today we will know everything about the credit card billing cycle, and you can expect that all this information will never let you get caught in the whirlpool of credit cards. For easy understanding, we will take the example of HDFC CREDIT CARD where you get 20 to 50 days of the interest-free period to pay your bill.
What is the Credit card Billing cycle?
The statement generation of a credit card is on a fixed date every month and after that day 20 days, 15 days, or 25 days in some cards, within which you have to pay the principal amount that you used on the card without paying any extra amount.
This cycle runs every month, which is called the billing cycle. In every billing cycle, every single expenditure that you have made with the card, interest if any because of your last payment, the total calculation will be done. with this, your account gets refreshed.
The reward point on your card is also updated after every billing cycle. Therefore, always remember your billing date and plan your spending accordingly. More topics that can help you understand the billing cycle are given below.
What is the Billing date of a credit card?
Billing date is the date when all the expenses incurred on your card are calculated, calculating how much amount you used your card till the billing date.
If there were any arrears of your last month, if you did not fill your previous bill at the right time, or did not pay it in full, then that amount will also be added to it. Also, late payment, if you have paid the previous payment after the due date.
If you have not paid the entire billing amount in the previous month, then it will also be calculated, that amount will also be added to your bill of this month, and along with the interest that is charged on the remaining amount of the previous month, which is at least 25 Is 30 percent annually. Even above this interest amount, you have to pay 18% GST.
For example, let’s say I have an HDFC card, whose billing date is 18th of every month. And due date or payment date is 20 days later on the 8th of every month. Here we will try to understand the billing date by keeping in mind the two types of situations that may occur.
- If on the previous due date, I have filled the entire amount mentioned in the bill –
I had made my full billed amount (for example 24 thousand) this month before the 8th date which is my payment date. and I have spent 50 thousand on my card since the 18th of last month. Now when my bill will be generated on the 18th night this month, my billed amount will be 50 thousand, which I spent on my shopping and services. No separate interest and GST will not be imposed on that principal amount. I have to pay for this month by 8th of next month. By paying the full amount of 50 thousand on the 8th or before the due date, next month, I will save my self from all kinds of finances, interest, and GST on both these.
2. If on last due date I have not filled the entire amount mentioned in the bill –
In this second situation, let’s assume that on the 8th of this month, which is my payment date. I filled the partial amount of the dues which were 24000 rupees (As for example), the partial amount or the minimum amount which was 5 thousand rupees. So now I have to pay interest on my Remaining Amount which will be 19 thousand, and my bank will also charge me 18% GST on this interest amount. So now when my next statement is made on the 18th, my previous dues, finances, and GST interest will appear, and the expenses that I have incurred this month will also be added.
What is the DUE Date / Payment Date of Credit card?
The due date of a credit card is the final day on or before which you have to pay your card bill. If you pay your entire amount on time, then you do not have to pay any extra charges. With the bill payment date, there are two things on your card –
- Minimum amount Due
- Total amount Due
The minimum amount due is the amount of your card that you must pay in order to keep the account updated. By paying the minimum amount, you can avoid the payment delay penalty on your card. The minimum amount your bank gives you is generated, which is about 10% of your total bill.
Total Amount due is the total bill of your card which appears in your statement. You can avoid every kind of penalty by paying the total amount.
Famous credit card & Maximum Interest-free days-
Does anyone pay GST even if the total bill is paid on time?
No, if you have made full payment at the right time, meaning due date or before then you do not have to pay any GST or fine. Like GST, you pay only on the interest, penalty or fine on your card. There is no GST on your principal amount.
2. Does the bill payment date or a due date change every month?
Yes, in some cases the bill payment date is further back than one or two days every month. In fact, your bill generation date means the date of making a statement is fixed, then you have to pay 20 days after the bill is generated, or even 15 or 25 days in some cards, then the next month is 30 days or 31 days 28 days. According to this, you sometimes get more or less a day for payment.
If the bill generation date of my card is 18th, then I have to make my bill payment by the 8th date, if the month is 30 days, if the month is 31 days, then my payment date will come on the 7th. So, anytime read your credit card statement carefully and remember what is the due date.
In another case, if the billing date of one of my cards is on 06th, then my payment date will be 20 days later on the 26th. So as you can understand, the payment date of this card of mine will always be the same. The month is 30 days or 31 days my due date will not change.
3. Can I change my billing cycle?
Yes, if you have a problem with your billing cycle, meaning your card’s bill generation date and payment date, then you can request your bank to change your billing cycle. When is your statement generated and your due When the date comes according to that, you can change the bank by giving a request letter.
4. How can I plan my expenses according to the billing cycle?
You can plan your big purchases according to your billing date or statement date, and save a lot of money. For example, if the billing date of your card is 18th, then you should buy any big item through your card on or after the 19th date so that your purchase will be calculated in your next month’s bill. You have to pay your due after next month, meaning you will get about 50 days interest-free period.
5. Can one use the remaining credit limit after the bill is generated, before paying the bill?
Yes, you can use whatever limit is left in your card after the bill generation, before you pay the current bill and it will be calculated in your next month’s bill. The bank does not charge you a fine for this.
6. What can be the disadvantages of not paying the credit card bill on time?
If you do not pay the credit card bill on time, you can go through a huge loss. Along with a heavy interest in the billed amount, you will have to pay a lot of penalty and GST on it. Your bank sends a record of your payment history to the credit bureau every month, according to which credit bureau generates your cibil score. So if you did not pay your card at the right time, your cibil score will fall, and you will have someone in the future will not be able to take loan from any bank.
7. What are the disadvantages of filling only the minimum credit card amount?
If you are paying the minimum amount of your card then you will not incur a penalty for non-payment. The interest will continue to run on your remaining amount, so always clear the entire dues of the card.
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