Payment due date vs credit card closing date

Why It’s Important to Pay Bills on Time

Most lenders use the FICO® scoring model to assess credit scores. Under that scoring model, 35% of your credit score depends on your payment history. So if you have a record of making late credit card payments, that can ding your score.

There’s another reason why you should make paying off your credit cards a priority. A credit card is a type of revolving credit account. Unlike installment credit accounts – like mortgages and student loans – revolving credit accounts allow you to borrow money whenever you need it up to a certain threshold (your credit line). There’s no fixed monthly payment and you can carry a balance from month to month by not paying your bill in full.

When it comes to your FICO® credit score, revolving debt typically carries more weight than installment debt. So while making any kind of loan payment after its due date can hurt your credit score, late credit card payments can do more damage to your credit.

The amount of debt you owe accounts for 30% of your FICO® credit score. An important part of that variable is the credit utilization ratio (the amount of credit you’ve used compared to your credit line) associated with your revolving credit accounts. That means your credit score could take a serious dive if you miss your credit card payment deadlines and you’ve used a significant portion of your available credit line.

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What if you cant change your due date?

If your issuer denies your request for a due date change, consider shifting your payment habits anyway. Remember: The due date is a deadline. There’s nothing that prevents you from paying your statement balance before then. Your statement will arrive at least three weeks before your due date, so consider paying your bill immediately upon receiving the statement. That way, if your credit card due date is near other due dates, you give yourself more buffer time (and potentially another paycheck) in between bills.

You can also turn to the bills (like utilities or phone bills) that are conflicting with your credit card payment. You can request a different due date or change your payment habits to find a balance that works for you.

What is a payment due date?

A credit card payment due date is your deadline for making an on-time payment. You’ll find your payment due date on your statement each month, along with your balance and your minimum payment. This is the last day to make a minimum payment before incurring late fees or penalties. 

It always falls on the same calendar date. For example, if your  payment due date is April 25th, your next payment due date will be May 25th – and every 25th day of the month going forward. 

Here’s a pro tip: ask your credit card issuer to change your due date if it falls at a bad time of the month. For example, if you usually have more cash at the start of the month, consider shifting to an earlier due date. Your statement cycle will shift accordingly. 

How to determine your credit card grace period

Any new purchases you make after your statement closing date, which marks the end of that month’s billing cycle, will go on the following month’s billing cycle. The grace period falls between that closing date and your next monthly payment due date.

Whether you’ll save interest during a grace period depends on the date you make a payment and whether you carry a balance forward.

Confused? Let’s look at a couple of examples.

Say you make your payment by the due date and pay off the balance in full. With no balance carried forward, you’ll receive an interest-free grace period for new purchases in the current billing cycle.

On the other hand, if you pay off most of a $1,000 balance but leave even $10 unpaid, each new purchase you make during the current billing cycle, plus the unpaid balance, will be assessed interest. That may seem harsh, but it just goes to show how crucial it is to pay off your balance in full.

Does every credit card have a grace period?

No. Credit card issuers are not required to offer a grace period.

The good news is that many still do. And if your card has a grace period, the issuer must ensure that bills are mailed or delivered at least 21 days before the due date.

Do grace periods apply to cash advances or convenience checks?

Generally, no.

As the Consumer Financial Protection Bureau notes: “If you use your card to get a cash advance or use a check you received from your card issuer, generally you will start paying interest as of the date of the transaction.”

Now that you know how a credit card grace period works, let’s look at some ways to make the grace period work to your advantage.

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Why you might want to change your credit card’s due date

Changing your credit card due date may offer the following benefits:

You may gain flexibility in managing your finances. Many other vendors – such as your utility provider – are likely to be inflexible with respect to statement due dates. You can change your credit card’s due date to a time of the month when you have fewer demands on your money.

You may be able to improve your credit health. Consider setting your payment due date on a day that is flexible for you and your finances. For example, you may want to schedule your due date soon after a direct deposit or paycheck arrives in your bank account. Keep in mind that on-time payments may account for a large portion of your credit score.

You may be able to save more effectively. A common refrain among financial experts is to "pay yourself first" by setting aside savings before spending on discretionary items. If you change your payment due date to better align with your other money inflows and outflows, you can keep more of your money in the bank and better commit to your savings goals.

What Happens if You Miss the Payment Due Date

If you miss your due date on a credit card or loan, you’ll face late-payment penalties. These can include a late-payment fee and interest rate increase. With rewards credit cards, you might forfeit your credit card rewards if you miss just one payment due date, depending on the terms of your rewards program.

Unfortunately, making up your payment won't reinstate any lost rewards, and you'll have to start over again.

You can make your payment plus the late fee as soon as you realize you've missed your payment. In some circumstances, the credit card issuer may be willing to waive the late fee, particularly if it's the first time you've been late with a payment. Don't wait until your next payment due date to make up the missed one. By that time, you'll be at least 30 days late, and the late payment will go on your credit report, damaging your credit rating.

Changing your credit card

That bold due date on your credit card account statement may leave you thinking it's set in stone, but it's not. Your credit card company may be willing to shift your due date to a more convenient day of the month, like your payday. 

You can log in to your credit card's online interface to see if there is an option to change the due date. If there's no online option, you can call the customer service number on the back of your credit card and tell the representative you'd like to change the due date. 

Keep in mind that not all credit card companies will allow due date changes, and those that do will have rules limiting the changes you can make. They also generally won't allow you to skip a payment by changing your due 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 because of your credit utilization ratio. This ratio, as its name suggests, measures the amount of your 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 certain, though, is that a lower credit utilization ratio is always better for your credit score. If you have a low amount of credit card debt, your credit score will rise. If you are using most of your available credit when your card provider reports to the credit bureaus, your score will fall.

A higher score makes your life easier. You’ll more easily qualify for loans and new credit cards if your credit score is high. You’ll also qualify for lower interest rates on these products.

It makes sense, then, to pay off as much of your credit card balance before your statement closing date instead of waiting to pay it off on your due date. Doing this will lower your credit utilization ratio and help you avoid a hit on your credit score.

But don’t worry if you don’t have the money to pay off your debt before your closing date. Save your dollars to make sure that you can make a payment – hopefully one that covers your entire 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 cause your credit score to fall by 100 points or more.

When You Should Make a Credit Card Payment

You’ll be in good shape if you can pay off your credit card by the due date, especially if you pay your entire balance. Paying at least part of your bill before the closing date could be even better if you want a good credit score.

But the best time to make a credit card payment may be whenever your credit utilization ratio exceeds 30%. By tracking your credit utilization ratio and keeping it as low as possible, you can protect your credit score. And you won’t have to worry about remembering the date when your credit information will be reported.

To calculate the credit utilization ratio for an individual credit card, you can take your credit card balance and divide that number by your credit line. Then multiply that number by 100.

Credit reporting bureaus also consider your overall credit utilization ratio. If you have multiple credit accounts, that’s equal to the sum of all of your credit card balances divided by your total credit limit.

The Bottom Line

While it’s most important to remember your credit card’s due date – and to make at least your minimum monthly payment at this time – your closing statement date is another important day in your credit card’s billing cycle. And if you can swing it, bringing your card’s balance to zero by that date can boost your credit score. To learn more about managing your credit card, check out our guide to paying off credit card debt.

Recommended Readings:

The best day of the month to pay your credit cards

4 dates to look for beyond the due date on your credit cards

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