Are you struggling to understand what the due date on a credit card is? This learning is essential for managing your credit card effectively and avoiding unnecessary fees or interest charges. The due date is simply the deadline by which you need to pay off the outstanding balance on your credit card statement.
Plastic money is not a luxury anymore; it has become an essential part of everyone’s life. Having knowledge of how credit card billing works is essential. You also need to understand the importance of paying your credit card bills on time.
Understanding the Due Date in Credit Cards
Credit cards are designed to give you access to funds for daily use and emergencies. This fund, known as the credit limit, is set by the issuer. From this limit, you can use what you need in a given period and that is what you need to repay on time.
Credit card companies make it convenient for the user by providing a period that is interest-free, which means:
- The period between the start of your billing cycle and your due date
- Usually, 18 to 55 days
- The window where you can repay your balance in full without incurring any interest
Now, let’s understand what is due date:
- The date by which you are required to make at least the minimum payment on your credit card bill
- The due date is set after the billing cycle (usually 30 days) ends and gives you around 10-15 days to make the payment
- This date appears on your credit card statement
You can also change your billing cycle as per your preferences or salary credit date. To do this, you will need to contact your credit card company.
Components of Credit Card Bill Statement
To have a better understanding of what is the due date on a credit card, you need to understand the elements of a credit card bill statement. This will help you comprehend the process and allow you to make informed decisions while handling your credit card.
Here are some major aspects you must consider learning:
- Billing Cycle
The duration of this period varies from lender to lender, but generally, it ranges between 28 days and 31 days. Once you choose your credit card company, you can find out about your billing cycle as well.
This has three aspects:
- Start Date: This denotes the beginning of your billing cycle
- Bill Accrual: This denotes the period when you accumulate charges or expenses on your credit card
- Statement Closing Date: This denotes the last day of your billing cycle
If you have multiple credit cards from multiple lenders, then this cycle will vary for each of them.
- Statement Date
Once your credit card company has details of your credit card activity within the billing cycle, they will proceed to generate your bill. The statement date is:
- The date your credit card outstanding bill is generated, and you get a notification
- It naturally follows the date when you activated your credit card for the first time
This means if your credit card has been activated on the 26th of October, then you can expect your next statement to reach around that date. In your statement, you can view when and where you have used your credit card.
- Outstanding Amount
Your outstanding amount refers to:
- The total balance you owe to your credit card issuer
- Apart from the purchases made on the credit card in the billing cycle, it also shows the interest it has accumulated for past unpaid dues over that period
- It will indicate all other activities as well, such as if you have used your credit card for EMI, cash advance or loan
- Minimum Due
This is a small part (usually 5%) of your total billing amount, which you need to pay at any cost. Sometimes, a cash crunch may make it difficult to pay your credit card bill in full on time, but failing to pay the minimum amount by the due date can have a serious effect on your credit score. Paying it helps you avoid the late payment fee. However, the remaining balance will attract interest on a daily basis until you pay it off in full.
- Repayment Period
You need to make the payment of your credit card bill within 10 to 15 days of receiving your credit card bill. Just like the length of your credit card billing cycle, your repayment period will also depend on your credit card company. But, in most cases, this is the period in which you’re required to make the payment.
- Credit Card Due Date
Your credit card due date is the last date of your repayment period. For example, if your credit card bill was generated on the 26th of October, and your credit card company has a 10-day repayment period, then your credit card due date will be on the 4th of November.
Things to keep in mind regarding your credit card’s due date:
- Make sure you pay your bill within this period; otherwise, your balance will start to accumulate interest
- Based on your cash flow, you can make arrangements to get a favourable due date to avoid falling into a debt trap
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