What is closing date on credit card? You must know this date precisely to plan your monthly budget because if you don’t know what terms like “closing date” mean, you can’t act accordingly. Stay here and read this article from Hanfincal to understand and clarify everything.
1. What is the closing date on the credit card?
The closing date on the credit card is the last day of the billing cycle and when the credit card statement for the account is compiled.
Credit card billing periods are typically 29 to 31 days long and your closing date is not the same as your payment due date.
If the cardholder began the billing cycle with a balance, the closing date is also when the credit card issuer calculates interest charges from the billing cycle based on the statement balance. It will also calculate the minimum payment you must make on or before your due date in order to avoid a late payment charge.
If you make your credit card payment before this date, you owe your creditor less money as of the statement closing date, which means your interest will be lower when they calculate it. Most credit cards provide a grace period of 21 to 25 days between the closing date of your statement and the payment due date.
2. Do the closing date affects your credit score?
In fact, the closing date has no effect on your credit score. This is simply a timeline of when a billing cycle for your credits will end. However, if you miss this deadline without making a payment, it will have a negative impact on your credit score.
Paying attention to the next due date on a credit card aids in budgeting. It’s really important since you can avoid a negative credit report. For instance, if you have a $600 credit limit and have utilized $585 of it as of the closing date, that number is reported to the credit bureaus.
Even if you pay off the card in full after the statement closing date, your high percentage of card utilization has been reported. That is a red flag. However, if you pay off the card before this date, the amount you are reported to owe is now $0. This will protect your credit score.
3. Does making payment before the closing date increase your credit score?
If you make the payment before the closing date, your credit score will increase. This is because when the credit card company reports your balance information to credit agencies, you’ll have a zero balance, which will likely increase your credit score. In addition, you can take benefits including saving money on interest rates and avoiding late fees.
What is closing date on credit card? Hanfincal hopes you know clearly after reading our article. This date is nothing to be afraid of if you know what it is and how it affects your credit. Learn everything about your surroundings and how it affects your credit history to act accordingly. Follow us to get new information about the credit cards topic updated every day.
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