Change your credit card billing cycle to manage cash flow: Here's how

In March 2024, the Reserve Bank of India (RBI) revised its guidelines, mandating that credit card issuers must permit customers to alter their billing cycles at least once. This change, outlined in the 'Master Direction — Credit Card and Debit Card — Issuance and Conduct Directions, 2022', introduces greater flexibility for cardholders to synchronise their billing cycle with their financial routines.

Timely payments and financial flexibility

Timely payment of credit card bills is crucial to avoid a negative impact on your credit score and to steer clear of significant late fees. The challenge arises when the due date does not align with your cash flow, complicating timely payments. By adjusting your billing cycle, you can ensure due dates match your financial circumstances, thus facilitating prompt payments.

Take the case of Rohit: He receives his salary on the first of every month. Previously, his credit card due date fell on the 25th, often leading to a crunch as his monthly expenses would deplete his account by then. With the ability to change his billing cycle, he opted to move his statement date to align closer to his payday, ensuring he had sufficient funds for his payment. This adjustment not only helped Rohit manage his finances more efficiently but also reduced the risk of late payments and the associated fees.

Managing multiple credit cards

Furthermore, individuals with multiple credit cards find managing various due dates challenging, which can lead to missed payments, incurring high interest and fees, and negatively affecting their credit scores. Aligning due dates according to one's salary or business cash flows can significantly ease financial management, allowing for a more organized approach to credit obligations, according to Bank Bazaar.

How to change the billing cycle

To alter your credit card billing cycle, contact your bank. Many banks offer the option to change this online via their net banking services, or you can reach out to their customer care, as per Kotak Mahindra Bank. It’s important to familiarise yourself with your bank's specific procedures for changing billing cycles to ensure a smooth transition.