Billing cycle: Definition, how long it is and more
Understanding how your credit card’s billing cycle works can help you manage your money and prepare for upcoming bills. You may even be able to use this knowledge to make strategic decisions that can give you more time to pay off purchases or improve your credit scores.
Keep reading to learn about what a billing cycle is, how it works, how long it lasts and more.
What you’ll learn:
-
A credit card billing cycle refers to the period of time between two billing statement closing dates—typically 28 to 31 days.
-
When a billing cycle ends, credit card issuers add up all transactions from the billing period and carry over any outstanding balances from the previous billing cycle to provide a credit card statement.
-
Understanding how your billing cycle works can help you plan for upcoming purchases and make on-time payments.
-
A billing cycle can impact your credit scores when information—like your current balance—is reported to the credit bureaus.
What is a billing cycle?
A billing cycle is the number of days between two statement closing dates. A billing cycle is also known as a billing period or a statement period.
At the end of a billing cycle, your transactions from the billing period and any previous balances are added together to determine your statement balance. The bill for your statement is usually due around three weeks later, although it depends on the credit card company. Then the next billing cycle begins right away.
How does a credit card billing cycle work?
During each billing cycle, your card issuer adds up all the transactions that occurred during the period. Your issuer will also add any balance that wasn’t paid off from the previous billing cycle. Then it will send you a credit card statement with a summary of the account activity, statement balance, minimum payment and due date.
Transactions that may be included when calculating your balance include:
-
Purchases
-
Payments
-
Interest charges
-
Statement credits
-
Fees
-
Cash advances
Credit card grace periods
A credit card grace period is the time between the end of a billing cycle and the bill’s due date when you may not be charged interest on your purchases—if you pay your balance in full by the due date. Grace periods are usually between 25 and 55 days.
For example, Capital One’s grace period is at least 25 days. And if you pay your bill in full by the due date each month, you won’t be charged credit card interest on your purchases.
Example of a credit card billing cycle
Say your billing cycle runs from the first to the 30th each month, with the statement closing on the 30th. You have a balance of $200. If your payment due date is the 28th of the following month, you’ll need to pay the $200 balance in full by the due date—within the grace period—to avoid interest charges.
How long is a billing cycle?
Credit cards often have a billing cycle of around 30 days. But billing cycles can vary depending on the timing and card issuer, typically ranging from 28 to 31 days.
To comply with federal regulations, your card issuer must use equal billing cycles. But there’s a little wiggle room to accommodate weekends, holidays and months that are longer or shorter than others.
You can review your credit card agreement or credit card statement to find out exactly how long your card’s billing cycle is.
Can you change your billing cycle?
You generally can’t choose the length of your card’s billing cycle. But some issuers, like Capital One, may let you request a new due date for your bills. If approved, the change may take one to two billing cycles to go into effect.
Can you use your billing cycle to plan for purchases and payments?
Understanding how billing cycles, statement balances, grace periods and due dates work can help you make strategic decisions about how and when to use a credit card.
Knowing when a billing cycle ends can help you budget for the upcoming bill. Paying off your credit card in full by the due date can help you avoid interest charges.
Do billing cycles affect your credit scores?
Billing cycles can affect your credit scores because the reported balance and credit limit can impact your credit utilization ratio, which is a measure of how much available credit you’re using and an important credit-scoring factor.
Some credit card issuers send balance updates after each billing cycle to the three major credit bureaus—Equifax®, Experian® and TransUnion®. The exact timing depends on the issuer.
If you’re wondering about your credit score, you can use CreditWise from Capital One to monitor your credit. Using it won’t hurt your credit scores. And it’s free to everyone, even if you’re not a Capital One cardholder. Or visit AnnualCreditReport.com to get free copies of your credit reports.
Key takeaways: What is a billing cycle?
A billing cycle is the amount of time between when one bill is sent and the next is issued, typically around 30 days. Knowing the exact length and your payment due date can help you prepare for upcoming bills.
Capital One cardholders can use the Capital One Mobile app to check balances, pay bills, lock their cards and enable near real-time spending alerts.1,2 If you’re interested in learning more, compare Capital One credit cards today. You can even see if you’re pre-approved, without hurting your credit scores.
