The credit-card billing process can be tough to understand. Our general lack of financial literacy certainly plays a part in this, considering that you have to be familiar with key terminology as well as understand your basic rights and responsibilities in order to make sense of your monthly statement and, ultimately, keep your credit record clean. But it’s not all on us.
The subject matter itself is quite confusing, especially without a visual aid. Billing cycles effectively overlap, in the sense that your due date for a particular period will fall during the next if you always pay in full. It’s easy to forget that your statement balance only reflects purchases made during the first period and thus does not reflect the totality of what you owe. And confusion over what balance is reported to the major credit bureaus and when that occurs can also lead to missteps made in an attempt to improve credit utilization.
In order to help clarify this important issue, we mapped out a few months in the life of an imaginary credit card user. Hopefully this timeline will enable you to perfect your payment strategy and, in turn, increase your credit score.
If you’d like to double-check your own payment history or see how your credit score is doing, sign up for a free WalletHub account. WalletHub is the first and only website to offer free credit scores and full credit reports that are updated on a daily basis. Customized grades for the major components of your credit score will also tell you exactly how your payment history and credit utilization are impacting your standing.