This new billing cycle rule will help better manage finances

If you use a credit card, you should know the term called billing cycle. As the name suggests, billing cycle refers to the period for which your credit card bill is generated. Understanding the billing cycle is important for your financial planning. This will help you save significantly in interest charges and late fees.

Once a credit card is issued, the billing cycle generally remains fixed until you cancel the card. However, the Reserve Bank of India (RBI) has now allowed customers to change their credit card billing cycles once, starting this month. Since card issuers do not follow a standard billing cycle for all credit cards, the regulator allowed users to choose their own billing periods.

Understand the billing cycle

A billing cycle is the length of time between the last closing statement and the next. Let’s take an example to understand what it means

If your credit card statement is generated on the 18th of each month, the billing cycle will begin on the 19th of the previous month and continue through the 19th of the current month. All transactions, including balance transfers and cash withdrawals made during a billing cycle, will be reflected in your monthly credit card statement or bill. Any transactions made after the billing cycle will appear on the next credit card statement. For example, if you make a credit card transaction on the 20th of the month, it will appear on the next bill.

A billing cycle can vary from 28 to 31 days, depending on your bank or credit card issuer.

What RBI says about your credit card billing cycle

Previously, there were no rules for changing credit card billing cycles. Banks allowed customers to change their credit card billing cycles, depending on their internal policies.

The Reserve Bank of India recently stated, “Card issuers do not follow a standard billing cycle for all credit cards issued. In order to provide flexibility in this regard, cardholders will be offered a one-time option to change the credit card billing cycle as per their convenience. This new rule has been in effect since July 1, 2022. Thus, customers now have the possibility to modify their billing cycle.

How will this new rule help you?

Changing the credit card billing cycle will help users in more ways than one. “Allowing the unique option to change the credit card billing cycle is a great initiative to help cardholders manage their finances effectively,” said Pranjal Kamra, CEO of Finology Ventures.

This new rule will be extremely beneficial for those who use multiple credit cards. “For customers, it becomes simple because they don’t have to remember repayment dates for multiple credit card bills separately. They can bring everything to a certain date. This will allow them to plan their repayments better,” Sujay Das, Chief Risk Officer, Freo.

“Salaried people, especially those with multiple credit cards, should opt for this option to streamline their finances,” Kamra said.

Responding to the question of how to choose your billing cycle, Kamra explained, “Ideally, the billing date should be on or just after your payday of the month, to ensure that you are able to pay your bill. hassle-free credit card.”

“Furthermore, it allows the user to take maximum advantage of the 45-51 day interest-free credit period available,” he added.

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About Shirley L. Kreger

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