Billing Cycle

A billing cycle, also known as billing period is the length of time between billings for goods and services.

How long is a billing period?

The length of such a cycle is usually one month, but it may vary. There are some factors that determine the variability (from 20 to up to 45 days) of the time interval, such as:

  • The initiation date of a service
  • The issuing bank
  • The credit card
  • Costumers’ preferences: some financial institutions allow its customers to decide on their billing period so that it fits their needs.

A billing cycle always has a beginning and a closing date. The beginning of a billing period is right after the closing date of the immediately preceding cycle. The importance of the beginning and closing date lies in the fact that they are used by credit card companies to calculate the interests to be charged at the end of the cycle.

What are billing cycles used for?

Billing cycles are used for different purposes such as calculating interests and account statements. Throughout the cycle all purchases, credits or any kind of charges are registered in an account and costumers are billed for outstanding expenses at the end of each cycle. In general, there is a grace period between the closing date and the bill’s due date. The date on which your credit card obligation is usually payable ranges from 20 to 25 days after the closing date.