With a credit card, purchases made during a certain time period are billed on a monthly basis.
In order to keep your credit score high and prevent late fees, make sure you pay your payments on time.
It is essential to comprehend billing cycles in order to practice sound financial management.
New rules affecting billing cycles have been imposed by the Reserve Bank of India (RBI).
Credit Card Statement and Payment
A credit card statement lists all of your transactions for a billing cycle, including interest, late penalties, EMIs, and purchases. Credit card statements should be reviewed frequently to help keep tabs on spending and spot mistakes.
Typically, billing cycles consist of 28 to 31 days whereby transactions are documented. Repayment terms typically extend 10 to 15 days from the statement date, enabling bill payment without incurring additional fees.
It is essential to pay credit card bills on the due date in order to prevent incurring late fees and penalties.
The total amount owed after the due date is referred to as the outstanding balance and may be subject to interest charges.
Paying bills on time promotes responsible debt and money management. The smallest payment necessary to keep your credit score intact and avoid penalties right away is the minimal amount owed.
Billing of Credit Cards
A predetermined amount or a percentage of the entire balance, whichever is higher, is the minimum amount owed. If you just pay the minimum, interest will be applied to the remaining debt, which will incur additional expenses.
It is preferable for your credit score and financial stability to pay the bill in full. An example of billing would be this: a Rs 10,000 bill dated January 25 must be paid by February 7 if it is invoiced on the 25th with a due date on the 7th.
The credit limit is reset when the entire amount is paid; interest is charged even when paying the minimum (5%) to avoid penalties right away. The new RBI regulation permits you to switch billing cycles at least once.
You can prevent late fines and keep your credit score high by scheduling your billing cycle in accordance with your financial flow. The new RBI regulation makes it easier to manage finances by giving billing cycles greater flexibility.
