What is a billing cycle?

What is a billing cycle

To summarize, a billing cycle is the time in-between two different statement closing dates. During this period, your closing statement bill includes all of the transactions or fees incurred in-between these two dates. Typically, a billing cycle includes a 20 to 45 day interval. Many financial services utilize billing cycles such as credit cards, mortgages, student loans, and much more. In short, a billing cycle is just your required monthly payment.  

How does a billing cycle work?

For credit cards, your billing cycle will determine when your balance is due. It will show on your credit card’s account statement when your due date is and how long your billing cycle is. When it comes to mortgages, your first payment will be charged on the first day of the month after purchasing your home for at least 30 days. Similar to mortgages, loans typically state their billing cycle (around 30 days)  so that the borrower understands when their monthly payment is due.

Where can I find my billing cycle?

The easiest way to find your cycle is by looking at your billing statement. When it comes to credit cards, you can find your payment due date on your account either on the company’s mobile app or website. Additionally, if you can not find this information, call the credit card issuer to ensure you know when your statement is due. When it comes to mortgages and other loans, it is almost always due the first day of the month after signing off on the loan. However, if you are unsure, call them directly. It is important to know when exactly your billing cycle ends so you don’t miss any payments which can negatively affect your credit score. 

Can I change my billing cycle?

You may be able to discuss with your credit card company to change your billing cycle’s end date. However, you will most likely not be able to change or choose the length of your billing cycle. Although depending on your reasoning for changing the length of your cycle, the credit card issuer can take this request into consideration. 

Minimum payment on a billing cycle

On your credit card statement, there is an amount called your minimum payment. This is the smallest amount of money you owe the credit card company each month in order to stay in good standing. Typically, this minimum amount is based off of your credit card’s interest rate and current balance. Therefore, sometimes your minimum payment can fluctuate depending on your card’s end balance. Usually, this minimum amount is around $20 to $25, however, this varies from account to account.

How does my billing cycle affect my credit score?

The three major credit bureaus report your credit activity on a monthly basis, so they take into account what your credit behavior is during that billing cycle. This includes the payments made, purchases done, and transfers in and out of the account. Additionally, if you miss your payment due date, this will negatively impact your credit score. However, demonstrating good credit behavior throughout your billing cycle and making your payments on time will positively impact your score

Example of a billing cycle 

Now that you have a general understanding of what a billing cycle is, let us look at an example. Say you have a credit card that states your billing cycle ends on the 15th of each month. Despite the slight fluctuations in month lengths, your credit card balance will always be due on that date. So, when your billing cycle comes to an end, you will be able to see how much money you have spent and how much is owed to the credit card company. It is important to pay this amount on the due date and not the closing date of the billing cycle. The due date is the deadline of when to pay in order to avoid additional interest charges, whether the closing date is the last day of the cycle.

How can I use my billing cycle to budget?

Since your billing cycle gives you a clear deadline of when and how much you owe, you can use this information to your advantage when it comes to budgeting. Most credit card companies also provide you with how much you have spent during your billing cycle within certain categories. For example, it can state you spent $350 on groceries this month and $90 on transportation. This can be useful to see where most of your money is going and how it fits within your budget. Additionally, it allows you to specifically set aside expenses to ensure you pay off your balance in full and on-time.  

Why knowing your billing cycle is important

Your billing cycle determines when you need to pay off your balance. This term can be interchangeably used with monthly payments as well. It is important to know exactly when your billing cycle ends and what the length of your cycle is. Without knowing this information, you are most susceptible to late fee charges and negatively impacting your credit score due to missed payments. If your billing cycle end date is not convenient for you, discuss potentially changing your date with your credit card company or bank issuer.


How many days are in a billing cycle?

Depending on the financial service, it can range from 20 to 45 days. However, the standard billing cycle length is around 30 days.

What does 2 billing cycles mean?

Two-cycle billing cycle is a type of charging method credit card issuers use when applying interest rates on late payments. This means the apply interest to two full cycles of a card’s balance rather than just the most recent statement.

What is a billing cycle for a refund?

A billing cycle for a refund typically is the same length of time as a normal cycle. This ranges around 30 days, however, companies typically process it within 5 – 7 business days.

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