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A credit card's billing cycle is the approximately one-month period between statements' closing dates. Also called a billing period or statement period, your new transactions during this time will impact your next credit card bill. Understanding how billing cycles work can be important because you can time purchases and payments to better manage your finances and credit scores.
How a Credit Card Billing Cycle Works
A credit card's billing cycle is generally 28 to 31 days long. The transactions during the billing cycle are added to your previous balance (if any) and determine your statement balance at the end of each cycle. Your bill will then be due a few weeks later, and a new billing cycle starts right away.
For example, if your card's balance is $1,000 at the end of your current billing cycle, the credit card statement will be created showing that as your new balance. Your minimum payment will be based on this amount and is often due 21 to 25 days later.
The next billing cycle starts, and new transactions can impact your current balance, such as:
- Balance transfers
- Cash advances
- Interest charges
- Statement credits
At the end of the next billing cycle, your statement balance will be the sum of the previous balance and these transactions. If you paid the previous $1,000 balance in full, made $1,250 in purchase and received a $50 statement credit, your new balance will be $1,200.
Credit card bills are due on the same date each month—or the next business day if the due date falls on a holiday or weekend. But because months have a different number of days, the exact length of the billing cycle may vary from one month to the next.
Credit card statements will tell you the closing date for the associated billing cycle. You can also check your current billing cycle's closing date by logging in to your online credit card account.
How Your Billing Cycle Affects Your Credit Score
The length and timing of your billing cycle don't directly impact your credit scores. But knowing when your billing cycle ends can be important because credit card issuers generally report your account's information to the credit bureaus around this time. The information they report will then appear in your credit reports, which is what your credit scores are based on.
The reported balance can be particularly important as it determines your credit utilization ratio. This ratio is calculated by dividing the account's balance by its credit limit, as they appear on your credit report, and a high utilization ratio can hurt your credit scores.
For example, if your reported balance is $1,000 and your credit limit is $2,000, your utilization rate for that card is 50%. That's considered high and can impact credit scores. In general, always try to keep your utilization under 30%, and the lower, the better.
Because credit card balances are often reported at the end of each billing cycle, you could have a high utilization ratio even if you pay your bill in full each month. However, if you know when your billing cycle will end, you could pay down the account's balance early, decrease the reported balance and potentially improve your credit score by lowering your utilization ratio.
Can You Change Your Billing Cycle?
Your credit card company may let you change your bill's due date, and the billing cycle will automatically be shifted to align with the new due date. But check the company's rules before requesting a change, as there may be limits on how often you can request a change. The change also might not start for a few billing cycles.
Choosing a new due date won't impact your account's interest rate, grace period or how much interest accrues. But having all your bills due on the same date each month could make managing your payments easier.
You can also time major purchases based on your card's billing cycle. For example, if you make a major purchase at the start of a new billing cycle you could have about 50 days before the bill is due. And if you pay your credit card bill in full each month, you won't be charged interest on purchases.
Monitor Your Credit Scores
You can monitor your FICO® Score☉ for free from Experian to see how your score changes from one month to the next. Many credit scoring algorithms only consider your most recently reported credit card balances and limits, and the resulting utilization ratios, when calculating your score. If a high utilization ratio is hurting your credit scores and you can pay down cards' balances before the end of their billing cycles, you might be able to improve your scores.