A credit card is a system in which every month, the purchases you make within a certain time frame are added up and then you are billed. To make everything run smoothly, you need to pay that bill before a specific date called the due date. This keeps your credit in good standing and helps you avoid late fees and other penalties.
Understanding credit card billing cycles is essential to effectively managing your finances, and recent regulations implemented by the Reserve Bank of India (RBI) have further impacted how credit card billing cycles are structured and managed. Have done. Let’s understand everything you need to know about your credit card billing cycle.
Your Credit Card Statement –
A credit card statement is a detailed summary of your credit card activity for a specific billing cycle. It shows your past balance, all the purchases you made during the billing cycle, any ongoing installment payments (EMIs), interest charges, late fees (if you have defaulted), and the total amount you owe. Your credit Reviewing card statements regularly helps keep track of spending. It is good to check your details carefully and highlight errors to the issuer and correct them if necessary.
Billing cycle length and repayment –
This period can vary but usually lasts between 28 to 31 days. This is the time frame during which your transactions are accounted for. Also, it is important to understand the repayment period. After the statement date, you usually have about 10-15 days to pay your bill without any extra charges.
Billing date and outstanding amount –
The due date is the deadline for credit card bill payment. You must make the payment within this stipulated time frame to avoid late fees and penalties. Late payment can bring down your credit score.
Balance outstanding refers to the total balance outstanding on your credit card after the due date. Carrying the balance after the due date may attract interest charges, which will increase the total amount you need to repay. Paying your dues promptly helps to manage debt and financial obligations responsibly.
Minimum Amount Due –
Minimum amount due payment avoids immediate penalties and helps maintain your credit score. This is the smallest payment you can make to keep your account active and avoid late fees. It is usually calculated as a percentage of your total outstanding balance or a fixed amount, whichever is higher. It is important to note that interest charges apply on the balance after the minimum payment, which leads to additional costs over time. To avoid late fees, make the smallest payment possible but paying the full amount is good for your credit score and wallet.
How it works –
Let’s say you’re billed on the 25th of every month, and your due date is the 7th of the next month. If you receive a bill of Rs 10,000 on January 25, you have time till February 7 to repay it. Paying the full amount resets your credit limit, but if you can’t manage it, at least pay the minimum amount due (5% of the bill). However, remember that interest will be charged on the balance, which will impact your next bill.
RBI’s new rule for billing cycle –
According to RBI, now credit card companies will have to allow you to change your billing cycle at least once. This will allow you to align payments with your money flow, avoid late fees and maintain a healthy credit score. So, instead of worrying about due dates, you can make your billing cycle work in line with your financial rhythm.
Source : https://www.informalnewz.com/credit-card-rules-big-news-rbi-issued-new-rules-related-to-credit-card-bill-details-here/?amp=1#top
