An immense $931 billion — that’s how much residents of the United States owe towards credit card companies, according to an early 2017 report from Nerd Wallet.
However, the latest report from the Federal Reserve System points out that by the end of 2017, it reached and went beyond $1 trillion. That’s a lot of money, and experts believe that this will continue to climb. Especially if credit card holders don’t start better-swiping practices now.
Debts are a part of the American life. However, this doesn’t mean you should let it take over. Knowing your credit card closing date and how it differs from your payment due date is a good place to start.
Why are these dates important? What’s their significance? In this post, we’ll answer all these questions and more, so make sure you keep reading!
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.
First Things First: Know Your Credit Card Billing Statement
To avoid late or missed payments, you need to have a better understanding of your credit card billing statement. In essence, it’s the monthly report you get from your credit card issuer.
Here are the most important details of the billing statement – the sheets of papers you get monthly contains:
- Purchases you made within the previous monthly billing cycle
- The minimum payment due amount
- The credit card closing date
- The minimum payment due date
Credit card companies send these statements at the end of their clients’ billing cycle. You either receive this by mail or email, if you opted for paperless transactions.
You’ll find your credit card bill in various sections. This help you have an easier time understanding all those numbers the statement contains.
The First Section
One part will show you your previous balance and the payments you’ve already made. You’ll also see your credits. Credits are the amount of money you paid toward the balance, including refunds from the merchant.
You’ll also see in this section the total of new purchases you made within the most recent ended billing cycle. If you made any cash advance or balance transfer, you’ll also find it here. Fees and interests that your credit card company charge will also reflect here.
And finally, the total balance of what you currently owe.
The Second Section
The next part is where you’ll find the minimum payment due and the date when it’s due. You need to carefully look at this date, as missing it will result in additional fees. Late fees are hefty, which is why you definitely don’t want to forget this date.
Your credit card issuer generates a minimum monthly payment. Paying this allows you to pay your balance down. Which is important to maintain good standing and to have your credit line open and active.
More importantly, ensuring you take care of at least the minimum payment prevents your credit score from taking massive hits.
What’s a Credit Card Closing Date?
Now, you have a better idea of the terms you’ll encounter when looking at your billing statement. As mentioned above, one of them is the statement closing date.
Knowing exactly what this common – and crucial – term means is key to proper credit management. So… What exactly does this mean? And how does it affect you and your bills?
First off, a credit card closing date is one of the most important dates you need to always pay attention to. Forgetting about it can lead to delays in your payment. And when this happens, you can expect your credit score to take a hit.
Let’s break this date down for easier understanding.
The Billing Cycle’s Final Day
Basically, the closing date is your billing cycle’s last day. It’s during this time that your credit card issuer calculates and adds the finance charges to your balance. This also includes all purchases and other transactions you made between the last closing date and the current one.
One reason to be careful when it comes to closing dates is that most billing statements don’t tell you the next closing date. It’s easy to figure out though. Just add your next billing cycle’s number of days to your last closing date. Again, you’ll find the recent closing date on the current bill you just got.
Here’s an example:
Your previous statement showed that your closing date is May 01. Your billing cycle has 29 days. Add 29 days to your closing date, and this means that your upcoming closing date will be on the 30th of May.
This means that you’ll find each transaction you make between May 02nd and May 30th reflected on your next billing statement.
It’s Not the Payment Due Date
Remember, the closing date isn’t the payment due date. It’s not the date when you should pay your minimum payment. Actually, you have a few more days after the closing date to make the minimum payment and still get it done on time.
Most credit card companies inform the three credit bureaus on the closing dates of their cardholders. Knowing this date is vital, especially if you’re aiming to maintain low reported balances. This is an effective way to boost your credit score, particularly if you want to raise your chances of qualifying for a big loan.
In this case, you want to pay your balance down prior to the closing date. This way, a lower balance shows up on your next credit report. Doing this should boost or maintain your scores since credit utilization is calculated at 30%.
What About the Payment Due Date?
You need to take care of your due payments so long as you have a credit card balance. Your credit card issuer generates an exact amount of the minimum payment you need to make each month. Your credit card company also sets a date on which you should make this payment.
And that’s the payment due date.
Again, a credit card statement closing date and due date are two different things. Your credit card payment due date is the date itself when you should pay down your balance. You’ll find this on your billing statement.
Keep in mind that in most cases, credit card issuers require their clients to make payments before 5 PM (EST) on the specified due date. Miss this, and you’ll deal with late fees and penalties. There are some companies, however, that allow their customers to make payments up to midnight on the said due date.
You won’t usually find the exact time on your billing statement. So, to be sure as to what time you can make payments on the due date, contact your credit card company. Also, be mindful of the time zone, especially when you’re out of the country.
A good way to avoid late fees and penalties are to pay down your balance before the due date. For instance, if your statement tells you that your due date is on the 15th of June, then you can make the payment a few days early, say on the 13th of June.
Just make sure you don’t pay it too early. This can lead to your payment going towards an incorrect billing cycle.
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.