What is the billing cycle, due date and minimum payment? How it is calculated

Although the word “plastic” rubs people the wrong way these days, there is one thing people really like, despite the fact that it contains the word “plastic” – plastic money. Immersed in lucrative offers, convenience and security, plastic money is one of the most preferred forms of transaction. As a result, credit cards have found a pocket in almost every wallet. According to reports, India has around 64 million credit cards in circulation in 2021.

There are several things you should know before becoming an avid credit card user. The list is moderate in length. However, the first thing to know is the billing cycle. The billing cycle acts as a backbone upon which factors such as spending patterns, usage, and credit depend. If you have more than one credit card, the billing cycle requires the utmost attention.

The credit card billing cycle refers to the period at the end of which a statement including all the necessary details and numbers is generated. This mandate can last from 28 to 32 days and begins when you activate your credit card. All transactions, cash withdrawals, fees associated with transactions and finances, interest on unpaid balances, etc., are mentioned in the statement produced after each billing cycle.

A statement is usually drawn up based on the date you are due to pay off your outstanding credit card balance. Although there is no obligation to pay the full amount of the credit card, you must pay the minimum charges shown in accordance with the requirements. Otherwise, it can negatively affect your credit score, leading to a whole other set of problems.

The minimum charge is usually a small portion of the total amount you are required to pay. Credit card holders are required to pay minimum fees to avoid late fees and to keep their credit card account alive. However, it should be kept in mind that once the minimum amount is paid, the remaining balance is vulnerable to interest and can reach 48% per annum. Therefore, it is better that you pay the full amount before the due date. The due date is set between 21 and 25 days from the generation of the previous invoice.

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