How does a credit card billing cycle work?

A credit card billing cycle is the period of time between two credit card statements, usually lasting 28-31 days. On the last day of a credit card’s billing cycle – also known as the closing date –the card’s issuer will compile the account’s billing statement. This includes a bill for all the charges made to your account during that billing cycle, minus any payments made. You can find the starting and ending dates for your credit card’s billing cycle on your monthly statement.

Why Understanding Your Billing Cycle Is Important

Understanding your credit card’s billing cycle is important for a few reasons. First, it’s important because your statement balance – the amount you have to pay by the due date to avoid interest – is comprised of purchases made during the billing cycle. The statement balance is also reported to credit bureaus each month and factors into your credit utilization.

How the Timing of Purchases Affects Payment Due Dates

Secondly, the start and end of a billing cycle determine when you have to pay for a given purchase or fee. For example, if you purchase a big TV the day before your statement closing date, you’ll owe that money on your next due date – usually about 25 days later, or however long your grace period is.

However, if you buy the TV the day after your statement closing date, it will land on the next statement. So, you won’t have to pay for the TV until that statement’s due date, which could be around 50 days later. For those budgeting big purchases, timing the purchase to get an extra few weeks to pay can make a huge difference.

Billing Cycles and 0% APR Intro Periods

Billing cycles are also important if you are taking advantage of a 0% APR intro period. These zero-interest periods are sometimes measured in billing cycles, rather than months. This difference can be worth calculating if the billing cycle is shorter than a typical month, and you are tracking how much time you have to pay off a purchase before the promotional APR period ends.

Since your first statement has already been issued, any purchases you made after receiving it will show up on the next month’s bill. The dates of your billing cycle should be noted on your bill.

A credit card has a billing cycle of 30 days (typically). For the purchases you make within this billing cycle, the credit card issuer sends you a bill with a due date at the end of your cycle.

If you pay your balance in full by that due date, you don't pay interest on any of the purchases you made in that billing cycle. You are also eligible to avoid paying interest on purchases in your next billing cycle.

If you don't pay your credit card bill in full for a billing cycle, then you're charged interest on your balance and aren't eligible to avoid interest on purchases made in your next billing cycle.