How long can a credit card billing cycle be?
Curiously long billing periods don't mean you end up paying more annual interest
Fred O. Williams is senior reporter for CreditCards.com. A business journalist since 1987, his work has appeared in Kiplinger's Personal Finance magazine, the Buffalo News and USA Today.
How long can a credit card billing cycle be?
While there are rules that govern payment due dates, there is not a limit on the number of days in a monthly billing cycle. This can lead to curiously long billing periods – longer than any calendar month.
But while the interest charges are greater during these long periods, the costs are balanced out by shorter periods over the course of a 365-day year.
Two things on Deborah Engle's August credit card bill struck her as odd. First, the minimum payment was higher than the month before – even though she had made no charges.
"How can my credit card payment go higher when I have no purchases?" the Arizona resident said.
Second, the billing cycle was 33 days. "I have never seen 33 days in a billing cycle," she said.
The two quirky things were not unrelated. They demonstrate just how complicated credit card interest can be.
See related: How to change your credit card bill's due date
Banks’ payment process practices may determine billing cycle lengths
Elan Financial Services, which administers Engle's credit card, doesn't process card statements on a weekend, vice president Scott Feriancek said. Consequently, some billing periods are longer than a calendar month, as the statement closing date shifts to the following Monday.
The length of a billing cycle is flexible while other dates are constant.
- The payment due date should be the same date from month to month, under the Credit CARD Act.
- And the due date should not be less than 21 days from the closing date of the statement. If the 21st day falls on a weekend and the bank does not process payments during the weekend, it must give you until the next weekday before charging a late fee.
Why a billing cycle may have more days than a regular month
In Deborah Engle's case, the statement period began Aug. 9 and ended Sept. 10. With 31 days in the month of August, and Sept. 9 being a Sunday, the result was a 33-day billing period.
The previous balance of $5,722.35 carried a minimum payment of $144. That's based on an APR of 17.99 percent and a minimum payment formula equal to all the interest for the month, plus 1 percent of the balance.
The new balance was $5,670.92, reflecting Deborah's $144 payment – plus $92.57 in interest charges for the period.
Like most card issuers, Elan calculates interest by multiplying the average daily balance by a "daily periodic rate." The DPR is equal of 1/365 of the Annual Percentage Rate (APR).
With 33 days in the billing period, the new minimum payment due was $149, or $5 more than the previous, 30-day billing period.
- Although the new balance was lower, the three extra days of interest charges resulted in a net increase in the minimum payment, Feriancek explained.
- During shorter, 28-day billing periods there will be a break on interest that compensates for the longer periods.
Tip: Capitalizing on the break on interest charges that grace periods offer can save the typical cardholder from paying any interest charges at all – if you know exactly how grace periods work.
How common are the extra-long billing cycles?
Some other large issuers may have computer systems set up to close statements on a weekend, keeping them from having 33-day billing cycles, Feriancek said.
But while Elan Financial Services is not a household name among card users, it is a substantial credit card issuer. A unit of U.S. Bank, it administers credit cards behind-the-scenes for more than 1,400 relatively small banks and credit unions.
If you're unsure whether you may encounter an unusually long billing period on your credit card account in the future, reach out to your bank. Call customer service and ask them if they have systems in place to close statements on a weekend to prevent unusually long billing cycles.
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