How RBI’s latest rules on credit card billing cycle impact you
Mint explains how these two provisions impact credit card users. Controlling the billing cycles of your card has many benefits. A billing cycle is the period between two consecutive statement dates.
A statement date is the day your credit card bill of the ongoing month is generated and this is done on a fixed monthly date. The due date to pay the bill is typically 10-15 days after the statement is generated. This means that the card user essentially gets an interest free period of up to 45 days, inclusive of 30 days of the billing cycle and 10-15 days until the due date, combined.
The amount not cleared on the due date attracts interest and any payments made after the due date do not get credit-free period. With the option to change the billing cycle, you can set it in such a way that the due date falls at a time that suits your cash flow. Further, card users can also maximise the credit free period by setting the statement day closer to the period in a month when they spend the least, said Kashif Ansari, assistant professor, OP Jindal School of Banking and Finance.
“Say, for instance, a user pays most of the monthly expenses between the 1st and 10th of every month. If they set the statement date after the 25th in the month, the due date will fall around 10th or 15th of next month, giving them about 45 days of interest-free credit period for maximum transactions. In the same example, if the user’s statement date is around 10th, they will get only 25 days of credit-free period," Ansari explained.
Last, the flexibility to change billing cycles will help those with multiple credit cards. “The cardholder has to track both the statement and the due date for each card. Doing so for multiple cards can be cumbersome," said
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