Credit card users need to be wary of important credit card dates like credit card expiry date, annual fee due date, introduction offer date, payment due date, and of course, closing date. The closing and payment due date are two important dates every credit card owner must remember. And while many of us may be conversant with the meaning of a payment due date, only a few understand what a closing date means on a credit card.
The closing date is basically the last day of your current billing cycle. Generally, credit card billing cycles last 28 to 31 days.
Credit card closing date is an important date that credit card users must have at the back of their minds. Below, I have shed more light on this date. I have also explained how the date may affect your credit score.
What Happens if You Use Your Credit Card on the Closing Date?
What Does Closing Date Mean on a Credit Card?
You know how crucial it is to settle your credit card bill on or prior to the due date. If for any reason, you pay your bill after the due date, your credit card provider could slap you with a penalty. And if you end up paying 60 days (or more) late, your card provider can take further action by increasing your interest rate. And that, my friend, is the beginning of your problems.
If you pay your credit card bill 30 days late, your three-digit credit score will plummet, often by 100 points or even more. And that will result in higher interest rates if you take on extra loans or credit cards.
However, are you aware that there are two important dates when it comes to credit card bills? There is your credit card’s due date, which is when you must make at least your minimum monthly payment if you don’t want to face any penalty. There is also your credit card statement closing date (or credit card closing date).
In this article, I’ll provide you with details on a credit card closing date. However, before we go into that, let’s look at other important credit card dates.
Important Credit Card Dates You Must Note:
Here is a list of some vital credit card dates you should have in mind.
- Payment Due Date
Your credit card payment due date is an essential date to note, as you’ll face severe consequences if you forget or decide to ignore it. This date indicates the last day of the month you can pay the minimum payment on your balance without facing an extra late fee. You’ll also be charged interest on your revolving balance if you fail to pay off your balance completely before this date.
Your payment due date is also connected to the health of your credit score. Specifically, since your payment history is the most crucial factor that comprises your FICO score at 35%, paying your bill after this date could affect your credit score.
Lucky for you, your credit card payment due date doesn’t change each month, which means you can easily plan for the date. If you don’t like your credit card’s due date, you can contact your credit card issuer and ask that it is changed.
- Transaction Date
Do you see any date on your statement or app? It is called a transaction date. This date is when a credit card transaction happens. The posting date, or the date the transaction posts to your credit card statement, may not tally. Regardless, a transaction is any activity that has taken place on your credit card statement, like:
- Credit card payments
- Credits to your account
- Balance transfers
- Cash advances
- Purchases
Often, transaction dates are listed in chronological order on your statement. They may also appear based on user or transaction type.
- Credit Card Expiry Date
Your credit card expiry date will be listed prominently. You’ll either see it on the back of your card or its front. On the date listed, your credit card will stop functioning, although it doesn’t mean your account has been deactivated. Most credit card issuers will mail you a replacement credit card (brand new) before your credit card expires. It is advised that you destroy the old credit card and activate the new one.
- Annual Fee Due Dates
If your credit card has an annual fee, you’ll need to pay this fee once yearly. These fees are automatically deducted from your account and may be according to cardholder perks you get, which could include travel benefits, annual credits, insurance products, etc.
If you don’t want to pay your card’s yearly fee for an extra year, you have the option to:
- Call your card issuer to see if they can ignore the annual fee for the year
- Ask to downgrade to another card that doesn’t come with an annual fee
- Look for a card that doesn’t charge yearly fees
- Cancel your credit
Cards with annual fees offer lower interest rates, while cards without fees may have higher interest rates. So think twice before you decide to end your yearly fee due.
- Introductory Offer Dates
Credit cards often come with introductory offers and terms, and you’ll need to note when these offers close. Offers may include balance transfer offers, introductory interest rate offers, and sign-up offers.
For instance, some balance transfer credit cards waive balance transfer fees for the first 60 days after opening your account. At 60 days, you’ll be required to pay a balance transfer fee if you decide to transfer a balance. You might also get an introductory offer for 0% APR for any length of time, perhaps, 15 months. Once 15 months are gone, your credit card balance will start accumulating interest at the regular variable rate.
For sign-up offers, you’ll have to qualify. To do that, you must make qualifying buys before the deadline to receive your sign-up cash, miles, or other perks. Your time starts when your application is approved, not when you get your card.
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Credit Card Statement Closing Date:
Your credit card statement closing date is when your card billing cycle ends. It is also the date the credit card issuer sends you your monthly statement (usually via mail). Any new purchases you make after this date will be seen in the next month’s statement. This is also the date the credit card issuer calculates your interest charges according to your statement balance, though it won’t apply any interest to your account at this moment. While your payment isn’t due on the statement closing date, you can make your minimum monthly payment any time after the closing date.
How Does Your Credit Card Closing Date Affect Your Credit Score?
Each month, on your statement closing date, your credit card provider will report the balance on your card to the three national credit bureaus: Experian, Equifax, and TransUnion. This is an important day for your three-digit FICO credit score: the lower your credit card balance, the better it is for your credit score. This is due to your credit utilization ratio.
As its name implies, this ratio measures the amount of available credit you are using. There is no rule on how much of your credit you should be using at any one time. What is sure, though, is that a lower credit utilization ratio is healthy for your credit score. If you don’t have much credit card debt, your credit score will increase. However, if you are using most of your available credit when your card provider reports to the credit bureaus, your score will plummet.
A higher score makes things easy for you. You’ll find it easy to qualify for loans and new credit cards if you have a considerable credit score. That is not all! You’ll also be eligible for lower interest rates on these products.
It is wise, therefore, to settle as much of your credit card balance before your statement closing date instead of waiting to settle it completely on your due date. Taking this step will reduce your credit utilization ratio and help you avoid a hit on your credit score. However, don’t panic if you don’t have the money to settle your debt before your closing date. Save your money to ensure that you can make a payment, hopefully, one that covers your whole balance on or before your card’s due date. If you miss this payment by 30 days or more, your provider will report it as late to the credit bureaus, and that could affect your credit score and send it crashing by 100 points or even more.
Can You Change Your Credit Card Closing Date?
Are you ok with your credit card closing date, or do you wish to change it to something different? You can ask that your credit card provider change your closing date, including your due date, if you want to. Just note that if you change your payment due date successfully, it will also change your statement closing date.
Here is a clear example. Maybe you are paid on the 6th and 23rd of every month. If your credit card’s due date is on the 16th of the month, you might request that your credit card issuer change this to the 24th of the month. That way, you’ll have been paid a day before and will have enough money to pay a huge chunk, or even all, of what you owe on your credit card.
Contact the customer care whose number is located on the back of your card. You can then ask the service rep to change your card’s due date. If your provider agrees, and it usually will, this will also change your credit card’s statement closing date to some time from 21 to 25 days before your new due date.
But wait a minute. What might make you change your credit card’s due date?
- A new date might be after payday, making it easier to settle your balance.
- You might want to separate bill payments, ensuring that you have enough breathing space between your rent, credit, and utility payments.
- You might want to raise your chances of paying your balance off completely, improving your credit utilization ratio.
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Difference Between a Credit Card Closing Date and Due Date:
The credit card closing date and credit card due date appear similar. A novice might think a credit card due date is the same as a credit card closing date. To clear the air, I am going to differentiate the two terms. First, let’s begin with a terse definition of a credit card closing date.
Credit card closing date:
As said earlier, a credit card closing date is the last day of your current billing cycle. Generally, credit card billing cycles last 28 to 31 days. Your card issuer will combine every charge you make during this billing cycle. The amount you owe on your card’s statement closing date is the amount you’ll be charged on your card’s due date. Your due day often falls 20 to 25 days after your closing date. For instance, if your closing date falls on the first day of the month, you’ll usually need to make your payment sometime from the 21st to the 26th day of the month.
Having understood what a credit card closing date is, let’s look at the meaning of a credit card due date.
Credit card due date:
Your credit card due date is when you must pay at least your minimum monthly payment to escape any sanction. Usually, you’ll have 20 to 25 days from your statement closing date to your payment due date. This is regarded as the grace period; the time you have to gather up the money you’ll need to settle your credit card bill.
You don’t have to wait for your card’s due date before making payment. You can make credit card payments anytime you like. It is often very convenient if you make your credit card payments online. You can log onto your credit card account any time you like and settle your balance completely or make a part payment.
