Understanding the Process of Credit Card Bill and Key Considerations

You can enjoy exclusive rewards and perks on using a credit card but you need to pay the bill on time and in full to enjoy continued benefits. When done correctly, you can even enjoy credit card bill payment offers that make on-time payments more rewarding.

One easy way to understand the billing cycle. Here’s an easy and comprehensive guide.

A Closer Look at Credit Card Billing Cycle

Also known as the statement cycle, this is the time frame considered to create your invoice. All transactions that occur during this period will appear on the statement.

For example, suppose your credit card billing or declaration date falls on the 4th of every month. Here, the cycle starts on the 5th of the previous month and ends on the statement date. 

What is the Statement Date? 

Also known as the bill generation date, it is the last day of the billing cycle. Transactions made after this day are included in the next cycle. Why is it important to remember the statement date? Because it can help you manage your transactions and ensure your bill is manageable. 

For instance, suppose your billing date is the 4th, and you try to keep your credit card bills at ₹15,000. Now, let’s assume that you have reached this amount but need to use the card for another ₹5,000. If you know the billing date, you can easily decide whether you should use the card or not. 

If you need to pay on the 3rd, you can check and see if you can postpone the payment by two days. This will help you stick to your budget as the payment will be recorded in the next month. Similarly, if it’s the middle of the cycle, you can try any of the following options:

• Make an advance payment to reduce the balance
• Pay from your savings or other bank account
• Use another credit card, if available

What is the Due Date?

It is the last day of the interest-free period and the date by which you have to pay the bill. It is generally a few days or weeks after the billing date. Taking the above example, let’s say your bill is generated on the 4th the issuer requires you to pay the bill in 20 days, i.e., the 24th. 

Here, the 24th will be your due date, and the interest-free period is 50 days (26 days of the previous month and 24 days of the current month).

If you do not pay the outstanding amount by this date, it will attract an interest charge, and you may also not get exclusive credit card bill payment offers. In case you don’t pay the minimum due, the issuer will levy a late payment fee too. To avoid this, you can try any of the following:

• Sign up for reminders and set it yourself
• Set up auto-debit facility
• Check your credit account and track the dates

Understanding the Due Amount

When you get your statement, you can take either of the two actions before the due date:

• Pay the bill in full
• Pay the minimum amount due

To calculate the outstanding amount, the issuer will consider all the debit and credit transactions on your credit card. If you pay this entire amount before the due date, there will be no charges. 

However, in case you cannot pay the bill in full, you can pay the minimum amount. It is a portion of the total due amount. While it is generally 5%, it varies depending on the issuer, and some may even have a fixed minimum due amount. 

Consider this example where the billing cycle starts on the 6th and ends on the 5th of the following month:  

Here, the total outstanding amount is ₹7,200 (the credit amount is deducted from the total of all debit amounts). The minimum due, if calculated at 5%, is ₹360. 

If you choose to pay the minimum amount due, keep the following points in mind:

• It will help you avoid late payment charges, but the balance will attract interest
• Consistently paying the minimum amount can lead to high debt because the interest is compounded
• Only paying the minimum will negatively affect your credit score in the long run due to high debt

In addition to the above, you may lose out on credit card bill payment offers if you pay only the minimum due. Many issuers offer a discount, cashback, or other deals if you pay the bill on time, which can help you save more.

You can find all these details in the monthly statement, which the issuers send to your registered email. You may pick up the statement from the closest branch office, contact customer support, or log in to your account to know these details.

For a good experience that prioritises user control and convenience, One Credit Card stands out. It comes with the powerful One Credit Card app that gives you access to all your credit card details at your fingertips. You can also earn up to 5X rewards and find exciting credit card offers in just a few clicks. 

All of this ensures you can spend your time confidently without any hassles. Apply online to take control of your financial journey and unlock a world of convenience, rewards, and exclusive offers.