Credit Card Payment Due Date vs Statement Closing Date

Introduction

Your credit card bill has several dates associated with it, and you need to understand each of them if you want to stay on top of payments in a timely manner. And that’s usually pretty desirable, since it’s not only the most important factor in your credit score calculation — but also helps you save money in both fees and interest charges.

What Is a Payment Due Date?

Your payment due date is the last day you can pay your credit card bill without incurring a late fee. You need to pay at least the minimum amount due, but you should consider paying more if possible — and it’s even better if you can pay off the full balance each month before your due date.

Your payment due date usually occurs on the same day each month; for example, the 6^th or the 21^st of the month. Some credit card companies let you choose your payment due date so you can strategically spread it out among other bills that you need to pay, like utilities, car loans, rent or mortgage.

What Is a Statement Closing Date?

Your statement closing date is the last day of your billing cycle, and it usually occurs at least 21 to 25 days before your due date. This is when interest and minimum payments are calculated, and your statement posts to your account or gets sent to you in the mail.

Payments made in the window between your statement closing date and payment due date are applied to your current balance. Some credit card issuers consider this window of time a “grace period,” meaning that if you pay your full balance before the due date, you won’t be charged interest for anything you bought that month.

What’s the Difference Between a Closing Date and a Due Date?

Billing cycles are typically around 30 days long.

• The statement closing date is the last day in a billing cycle and the first day you can make a payment towards the new statement balance.

• The payment due date is the last day you can make a payment before it’s considered late. After the due date, any payments are applied to the next billing cycle.

The space between these two dates is often a grace period, which is typically 21 to 25 days long. During a grace period, if you pay off your full balance, you won’t be charged interest on new purchases. However, not all credit cards have grace periods, and they usually don’t apply to cash advances or balance transfers.

How Your Credit Card Closing Date Affects Your Credit Score

Your credit card’s closing date affects your credit score by starting the window for on-time payments. And since payment history is the most important part of your credit score, this is crucial. The sooner you pay after the closing date, the more likely you are to make the due date, and the less interest you’ll pay if you’re carrying a balance.

Of course, that grace period is nice, if you have one. Because as long as you “play your cards” right, it lets you save money in interest charges. But the grace period only indirectly affects your credit score.

That’s because if you carry a balance, you’re also probably increasing your credit utilization ratio, which is how much of your credit you’re using at the moment. So even though it’s not required, paying off your balance during your grace period could theoretically help your credit score by reducing your utilization. Now we’ve made it a twofer.

How To Manage Your Credit Card Payments With Closing and Due Dates

If your statements arrive in the mail or you get app notifications when they’re available, you don’t really need to know your statement closing date. The due date is the more important between the two. But if you find yourself going weeks without seeing a new statement, it’s probably time to check.

Then, you can do a few other things to manage your payments.

Keep track of your spending                 

Your first step is knowing what you’re spending, and that’s for a few reasons. First, you don’t want to max out your cards. Even if you temporarily go over your recommended 30% credit utilization ratio, pushing it to the limit isn’t a good idea.

Secondly, tracking what you spend on each credit card lets you quickly make sure the right purchases are showing up in the right places. That gives you the chance to dispute any fraudulent charges and repair any security leaks before paying for something you didn’t buy.

Make payments before the due date

Regardless of what your tracking and monitoring reveals, you need to make your payments on time — and that means before the due date if you’re doing it manually. The most important goal here is for the payment to post on time, which not only helps boost your credit score, but makes sure you don’t get hit with any late payments.

The reason to do it before the due date is because you don’t know when the cutoff is for applying payments to that cycle. Let’s say your due date is the 15^th of the month at 5:00 p.m. Eastern time and you make a payment at 6:00 p.m. Pacific, which is 9:00 p.m. ET. You’ve just missed the window by four hours, so your payment will be counted as late, even though you feel like you paid on time.

Set up automatic payments

Keeping track manually can be frustrating and time consuming, so setting up automatic payments is a fantastic idea. You can use AutoPay through your credit card account, which will generally guarantee your payment is counted as on time. Even if you choose to pay on the due date through AutoPay, it’s their system. So any technical glitch causing it to post on a later date would be their error, not yours.

The biggest exception to the rule would be if you didn’t have enough funds in your bank account to cover the auto debit. Then it’s your fault, and your payment can (and should) be considered late.

If AutoPay isn’t available, you can set up bill pay through your bank. But those payments are sent out as either an ACH transaction or a paper check, so there’s a greater chance of delay. Setting the payment date at least a week before your due date is the safest bet here.

Pay your balance in full

You don’t have to pay your balance in full if your goal is just to pay on time. But not paying in full means you’ll be paying interest on the balance, and potentially logging a higher credit utilization than you want. So in a perfect world, paying your full balance is probably the ultimate goal.

Determining the Best Time to Pay

The best time to pay is before the payment due date, because if your payment doesn’t post on time for whatever reason, it could still count as late — even if you paid it on the due date. But a more precise answer on when you should pay is going to hinge on whether you habitually carry a balance or pay the whole thing off each month.

If you’re planning to carry a balance because you can’t pay the entire thing, don’t wait until it’s almost your due date. Instead, you should pay your bill as early as possible after the statement closing date. In fact, it’s best to pay your bill the day you receive it, depending on how the creditor calculates your interest.

To find out, check the table at the top of the Terms & Conditions page. Known as the Schumer box, this crucial little at-a-glance summary is named after New York Senator Chuck Schumer, who pushed for legislation requiring the prominent display of rates, fees and other terms as part of the Fair Credit and Charge Card Disclosure Act of 1988.

[source URL: https://www.congress.gov/bill/100th-congress/house-bill/515]

Look for “How We Will Calculate Your Balance” near the bottom of the table. One of the more common credit card methods is “average daily balance,” which charges you more interest if you pay later in the month. So the earlier you pay, the better.

On the flip side, if you pay off your whole balance, the interest calculation method is irrelevant, and so is your annual percentage rate (APR). That’s because paying anytime during your grace period will ensure you don’t have to pay interest at all.

Look at the first section of the Schumer box titled “Interest Rates and Interest Charges.” One of the fields will say “How to Avoid Paying Interest on Purchases,” or simply “Paying Interest.” If your Schumer box doesn’t have this line, you likely don’t have a grace period.

If you do, it should say something like “Your due date is at least 24 days after the close of each billing cycle. We will not charge you any interest on Purchases if you pay your entire balance by the due date each month.”

So if you make a purchase but pay off your balance during that time, you won’t pay interest. That’s not to say you won’t get charged interest on previous balances or cash advances, just on new purchases. So you need to pay your full balance every month to take advantage of this interest-free spending.

FAQs About Payment Due Date vs Statement Closing Date

Q: What happens if I use my credit card on the closing date?

If you make a purchase on the same day as your statement closing date, it might show up on that statement. But it’s more likely going to post after the statement is generated, making it one of your first purchases for the next billing period.

Q: Should I pay off my credit card before the closing date?

You can pay off your credit card whenever you like. However, if you pay before the statement closing date, that payment will likely be applied to the previous billing period. Then you’ll have to pay again after the closing date (and before the due date) to take care of any new charges in that next billing period.

Q: How do I know my credit card closing date?

Payment due dates typically fall on the same day of the month, but statement closing dates can vary based on the length of the month. If you look at your current monthly statement, you can see the statement closing date for that period. It may say “Statement closing date” point blank, leaving no question. If not, the billing period might be shown as a date range, and the final day of that range is the closing date.

Q: Can I make more than one payment per statement period on my credit card?

This is a question for your creditor, since each one can make its own rules here. But generally speaking, most credit cards welcome an extra payment or two. The only caveat is that you’ll sometimes find a cap, because multiple payments can appear to be a sign of fraud or financial instability.

It might sound odd that a financial institution wouldn’t want your money, but a bunch of payments close together is not a typical pattern for most people. So that activity may get flagged as unusual. For example, a creditor might process up to three payments per cycle, but prevent the fourth from going through.

Bottom Line

Your statement closing date is the date your credit card statement is mailed or made available to you, and the payment due date is the last day you can make a payment without being charged a late fee. There’s usually 21 to 25 days between the two, which often gives you an interest-free grace period if you pay off your balance in full.

Combining full-balance payments with earning cash back or points on purchases is a great strategy. If you’re looking for a new credit card that offers rewards, see if you pre-qualify for one from Credit One Bank without impacting your credit score.