How changing your credit card billing cycle can help in better cash flow

Managing cash flow effectively is crucial for individuals using credit cards, and one of the most effective ways to achieve this is by adjusting the billing cycle of your credit card.

 

In March 2024, the Reserve Bank of India revised its guidelines, mandating that credit card issuers must permit customers to alter their billing cycles at least once.

 

Understanding billing cycles 

 

A billing cycle refers to the period between two statement dates on a credit card account. Typically, a bill is generated at the end of each cycle, followed by a grace period during which no interest is charged on new purchases. The due date for payment usually falls a few weeks after the statement date. If these dates do not align with when you receive your salary or other income, it can lead to cash flow challenges and missed payments.

 

 

“The ability to change a credit card billing cycle is a feature that many haven’t fully explored, but it can make a big difference for those looking to better align payments with their cash inflow.

 

For individuals managing tight budgets or inconsistent income schedules, this can help ease financial stress, said Prakash Sikaria, CEO and founder of super.money.

 

Benefits of changing your billing cycle 

 

Alignment with paydays: By adjusting your billing cycle to coincide with your payday, you ensure that sufficient funds are available when payments are due. 

 

Improved budget management: A billing cycle that aligns with your financial inflow can simplify budgeting. You can plan your expenses more effectively when you know exactly when your credit card payments will be due. 

 

Avoiding late fees: Late payments can incur hefty penalties and negatively impact your credit score. Adjusting your billing cycle helps mitigate these risks by ensuring that payment dates fall within your financial capacity. 

 

Easier management of multiple cards: For those with several credit cards, managing different due dates can be overwhelming. Consolidating payment dates or spreading them out strategically can ease financial pressure and reduce the likelihood of missed payments

 

Strategic selection of billing dates 

Financial experts recommend considering several factors when choosing a new billing cycle:

 

Salary credit date

 

Major monthly expense patterns

 

Due dates of other financial commitments

 

Interest-free period optimisation

 

How to change billing cycles 

 

To change your credit card billing cycle or due date, the process depends on your bank. Many banks provide the option to adjust the due date through their online banking platforms. Alternatively, you can contact customer support to request a change to your billing cycle. Keep in mind that each bank has specific guidelines for altering billing cycles, so it’s important to review and understand these policies before proceeding.