Content of the material
- Knowing the Numbers Will Make You More Attentive to Your Credit Card Accounts
- Making sure you earn your sign-up bonus
- Closing a Card With a Balance
- Checking the Due Date
- Can I Change My Credit Card Closing Date?
- Where to find your billing cycle
- Stretching your finances while avoiding interest
- Tips Of Credit Card Spending
- 1. Always Use Your Credit Card Immediately After The Closing Date
- 2. Pay Off The Amount Spent On The Credit Card Before The Closing Date
- 3. Use The 15/3 Credit Card Hack
- What should I do when my card expires?
- What to do when you get a new card
- Understanding these Dates is Key to Better Debt Management
Knowing the Numbers Will Make You More Attentive to Your Credit Card Accounts
Before we further discuss what a statement closing date and a payment due date are, it pays to know more about what the statistics can tell us about debts in general. Having some idea about the status of American household debts will help you realize just how important it is to have better credit card use and management practices.
First off, did you know that on average, each individual has a $6,375 average balance on his/her credit card? Considering that the average income of a U.S. household was $79,263 back in 2015, this credit card debt may seem small in comparison. But remember, this isn’t the only expenditure that a household has.
Totaling all debts, an average household has about $137,063 in debts. This includes all credit card balances, at around $16,883. $29,539 for car loans, and the biggest of them all: mortgages at $182,421.
All these may seem bad. However, these don’t just signify negative things about the state of the country’s debts. In fact, these greater expenditures also show a rise in economic satisfaction.
In other words, this means that you feel more comfortable in taking on new debts. That’s why you can purchase bigger ticket items.
What’s important is for you to know good credit card management. And one of that is keeping your impulse buying habits at a minimum. This, together with having a better understanding of the terms you’ll encounter with your credit card statement bills, will help you avoid drowning in debts.
Making sure you earn your sign-up bonus
A generous welcome bonus can be extremely valuable when you’re earning travel rewards from your credit card. Most credit cards that offer these bonuses have a minimum spending requirement that you have to meet within a specified time period, most commonly three months or 90 days.
For bonuses that require a minimum spending requirement (which is almost all bonuses), the time period given to reach it is not calculated based on your card’s billing cycle. It can come as a surprise to many that the clock starts ticking on your welcome bonus the day your account is opened, which is typically the same day your application is approved. This is generally before you receive the card or account number — unless you receive the number online as soon as you are approved.
But generally, this is not the day your credit card is mailed, received, activated or first used. And most likely, this period you have to meet a minimum spending requirement won’t align with your statement closing or due dates.
To be absolutely sure of how long you have to meet a minimum spending requirement, it’s always best to contact your card issuer and ask when the last day is to meet your minimum spending requirement. When possible, I prefer to do this using the card issuer’s secured message center. That way, you have the date documented.
Best practice, however, is to meet the minimum spending requirement as quickly as possible, to ensure there are no issues with receiving the welcome bonus.
When you’ve met your card’s minimum spending requirement within the specified time period, you’ll have to wait until your next statement cycle closes before receiving your promised bonus. Typically, the points, miles or cash back appear within a few days of your statement closing as long as you’ve met the minimum spending requirement during the previous billing cycle and within the minimum spending period. I’ve been able to receive a small extension of time to meet the minimum spending requirement on request, so if you somehow fall short it never hurts to ask.
Keep in mind though, if the card carries an annual fee — and it’s billed right away — the annual fee amount is usually not counted as part of the minimum spending requirement. For example, if the card requires you to spend $3,000 within the first 90 days and the annual fee is $99, that means you have to spend $3,000 in addition to the $99 spent on the annual fee. It does not mean you only need to spend another $2,901 within the 90-day time frame.
Closing a Card With a Balance
If you’re carrying a balance on a card and want to close it, it’s best to pay off the debt first. We recommend the avalanche method.
You don’t need to close your card just because it has a high interest rate, though. You could consider transferring the balance to another card with a lower interest rate. Some cards are designed for this purpose, with a long 0% introductory APR on balance transfers.
When you transfer a balance, there’s no need to close the card you transfer a balance away from — as long as it has no annual fee you’re probably better off leaving it open with a $0 balance and not using it.
Checking the Due Date
Don’t confuse your statement closing date with your payment due date. While the closing date is the end of your statement cycle, the due date is the date by which you must make your payment to avoid a late charge. Your statement will list both of these dates clearly. If there is any confusion or if you can’t tell exactly when your payment is due, call the number on the back of your credit card. Typically, you will have an option to enter your account number using your phone’s dial pad and a recording will give you your account details, including your due date. It will not, however, list your statement closing date. If it’s not clear, follow the prompts to speak to a card representative who will help you out.
Can I Change My Credit Card Closing Date?
Yes, you can change your credit card closing date, though indirectly. Since you are not the one who determines the lengths and dates of the billing cycle, most credit companies give you a chance to adjust your due date. Once the due date is adjusted, the billing cycle shifts too. You will be given several dates to choose from, and it is best to pick one that goes in line with your ideal cash flow. Note that most issuers don’t allow monthly change of due date, and when you adjust, it can take 1-2 payments before the same takes effect.
Where to find your billing cycle
You can find your credit card billing cycle listed on your monthly statement. You'll notice the start and end dates for your billing period are typically located on the first page of your statement, near the balance. Your card issuer may list the number of days in your billing cycle, or you'll have to do some counting. You can count the number of days beginning with the opening date and ending with the closing date.
For example, if the first day of your billing cycle is January 23 and the last day is February 20, your billing cycle would be 29 days long.
Stretching your finances while avoiding interest
Now that you know how your credit card’s statement cycle works, you can use that information to your advantage. If you are trying to avoid interest by paying your entire statement balance each month (which you should do when earning rewards to avoid negating the value of them), then your goal may be to stretch your finances as far as possible. If that’s what you’re after, then you’ll want to postpone large purchases until just beyond your statement closing date.
For example, if your statement closes on June 5 and your payment is due 21 days later on June 26, any purchase that posts to your account before June 5 will be due later that month unless you are OK accruing interest. But if you postpone that large expenditure until June 6, the charge will appear on the following month’s statement. Then you’ll have until July 26 to pay for that purchase, potentially giving you an additional 30 days free of “interest” depending on your account specifics.
Tips Of Credit Card Spending
1. Always Use Your Credit Card Immediately After The Closing Date
Using your credit card immediately after the closing date gives you enough time to pay it off and avoid any interest. Note that the interest is calculated on the closing date but applied on the due date if payment is not made in full. So, settling your account before the due date means you won’t owe your bank any interest.
2. Pay Off The Amount Spent On The Credit Card Before The Closing Date
Between the closing date and due date are 21 days grace period you can utilize to pay off your debt to avoid interest. However, the balance on your monthly statement affects your FICO rating. More than 30% credit card utilization is not good, and you should purpose to keep it low.
But, even if you spend to your limit but pay before the closing date, it won’t affect the credit score. The credit card company only reports the figure at the closing date, meaning the amount settled will not be reflected.
3. Use The 15/3 Credit Card Hack
This hack is where you make two payments monthly on your credit card balance instead of clearing it once. It works as follows:
Step 1: Check the credit card due date on your monthly statement.
Step 2: Pay half the amount due 15 days to the due date.
Step 3: Clear the balance 3 days to the due date
Using the 15/3 hack to avoid late payment gives you a better credit score. And, in turn, you will get better interest rates in personal loans and credit cards, plus pay low auto insurance premiums.
What should I do when my card expires?
Your credit card’s expiration may be a good opportunity to think about all the ways you use your card.
Go over your card statements to look at recurring charges. If you still want to use a service that’s automatically charged to your card, you’ll need to update the payment info with each vendor individually. Since you’re already evaluating your recurring payments, it’s also a good time to cancel any services you no longer use.
As for your old card, you should take care to destroy it to help protect against someone using it to commit financial fraud. Shredding or cutting up the card should be sufficient. If you want to be extra safe, bag the pieces of the card in separate trash bags.
What to do when you get a new card
Whatever the reason for receiving a new card, it’s a good idea to sign the new card as soon as you get it, and destroy the old card once the new card has been set up and activated. Different card providers have different ways of setting up and activating cards, but they should give you clear instructions on how to do this with your card.
If your new card is replacing an expired or damaged card, your PIN will usually stay the same. If your new card is replacing a lost or stolen card, you may be sent a new PIN (in a separate envelope) to activate your new card. Again, your card issuer will provide clear instructions on this matter.
When you get a new card, you will have to update any direct debits coming off that card. If your card details have remained the same, there is no need to do this, but if your card number or expiry date has changed, you will need to contact the companies who receive direct debits from that card to give them the updated information.
This could include your mobile phone provider, your utilities providers, and your landlord. If you don’t update your direct debit details, the payments could be rejected, which could result in you receiving fees and penalties for missed payments.
Understanding these Dates is Key to Better Debt Management
As you can see, your credit card closing date and payment due date differ greatly. That’s why you should always pay attention to which is which, so you can avoid paying unnecessary fees. Also, knowing what your closing date is will help you time your purchases better.
Want more tips to better manage your debts? Then make sure you head to our blog site. It’s full of useful information that’ll help you become debt-free sooner.