All You Need To Know About The Correct Time To Pay Your Credit Card Bill

correct time pay credit card bills

Possessing a credit card is one aspect whereas using it judiciously is another. Paying your credit card bill amounts on time is a critical part of using your credit card wisely. Every credit cardholder should be aware of various aspects of credit card billing and payment. We shall discuss these aspects in this article. 

Before discussing the timing of the credit card bills, one should understand that paying the bills on time is essential to develop a decent credit history. Credit rating agencies emphasize on the repayment aspect more than on anything else. A single missed payment can affect your credit score. Secondly, a default in payment results in substantial interest charges. Here is everything you must know about the correct time to pay your credit card bill.

When Do The Banks Issue The Credit Card Statement Or Bill? 

Every bank or credit card issuer has a stipulated date on which it issues the credit card statement. Usually, the due date of payment of the bill is around 20 to 25 days after the issuance of the statement or date of bill generation. Hence, you get an overall period of 45 to 50 days of interest-free period depending on the date you incur the debt. 

The Concept Of The Due Date And Interest-Free Period 

This example should clear the concept. 

Let us assume that you receive the credit card statement/bill stating that the due date of the invoice is May 25. The statement also contains details of the time of generation of the report. Let us consider May 4 as the bill generation date. In this case, you have 21 days to pay the bill. 

The credit card bill will contain all the expenses you made from April 5 to May 4. Similarly, the date of generation of the next bill will be June 4. It implies that any purchase you make after May 4 will reflect in the following statement. Therefore, the debt incurred on May 5 will become due on June 25. It amounts to a maximum of 52 days of interest-free credit. Similarly, a credit card purchase made on May 31 will have 25 days of interest-free credit. 

When Should You Pay The Bill? 

According to the credit card statement, you need to pay the bill either on or before the due date mentioned in the report. Hence, if the due date is May 25, your credit card account should receive the amount latest by May 25. Depending on how you make the payment, it can take a maximum of three days for the payment to reach your account. Therefore, it is advisable to pay the bill latest by May 22. It will not harm if you pay before May 22. The earlier you pay the bill, the more comfortable you will feel. 

How Do You Utilize The Interest-Free Period Wisely? 

Study your credit card bill properly. Understand the concepts of bill generation date, due date, due amount and minimum payment due. Timing your big-ticket purchases immediately after the date of bill generation can help you to avail the maximum benefit of the interest-free period. 

We shall continue with the example discussed above. If you purchase gold jewelry worth Rs 50,000 on May 5, you can enjoy the maximum interest-free period of 52 days because the amount becomes due on June 25. Thus, you get an interest-free loan of Rs 50,000 from your bank. 

It is easy when you have only one credit card. If you possess multiple credit cards, you should carry out a similar exercise for each of your cards and maintain a record of the same. Not all banks generate the credit card statement on the same day. Hence, it is advisable to monitor individual credit card statements. 

The Concept Of Interest 

If you do not make the complete payment of the credit card bill before the due date, the bank is free to charge interest @ APR on the unpaid amount from the time of incurring the debt up to the date of repayment. Further, every subsequent purchase bears interest from Day 1. In other words, you lose the benefit of the interest-free period. Once you clear the entire bill amount, the bank restores the interest-free period facility. 

The Concept Of The Minimum Payment Due 

Generally, you need to pay the entire bill amount before the due date. However, you have the facility of making part payments if you are unable to make a complete payment. If you notice your credit card statement carefully, you will find that the bank calculates your minimum payment due. It is usually 5% of the total bill amount. You should pay this minimum amount due to avoid defaulting on your credit card bill payment. If you pay the minimum payment due amount, the bank does not consider it as a default. Hence, they do not report it to the credit rating agencies. Paying your credit card bill is always beneficial as you can avail other rewards such as cashbacks and discounts on your credit card bill if you make online credit card bill payment via CRED

Points To Note 

We shall sum up the concept in a few bullet points. 

● Know every aspect of the credit card statement by going through it thoroughly. 
● Pay the entire bill before the due date mentioned in the statement. 
● If payment of the entire bill is not possible, ensure to pay a sum equal to or more than the minimum amount due. 
● Late payment of your credit card bill attracts late payment charges and interest @ APR. 
● Default in payment affects your credit rating.

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