Using credit cards has become the norm, even in cash-friendly India. The majority of consumers, both online shoppers and offline spenders, use credit cards to pay for everything from utility bills to groceries. Credit cards buy you nearly everything and consumers can’t live without them these days. Nonetheless, it is vital that you know about aspects of card use and how these impact your financial health.

For example, you should ask yourself questions like, “what is a billing cycle” or “what is the minimum amount due?” It is always relevant to be aware of factors relating to your credit card and understand them in the best possible way so that you can benefit from this knowledge.

About Credit Card Bills

When you speak of financial health, you mean the state your finances are in. Financial health must always be robust. For instance, if you are in debt, your financial health is affected in a negative way. To be creditworthy or financially healthy, your finances must be in order. The main reason for finances to face turmoil is when individuals find themselves in debt. This is the case when you don’t make loan repayments on time or in full amounts.

Since a credit card offers you a credit-free period, it is essentially letting you take a loan for purchases. This must be repaid at a later date. How to use a credit card prudently is an important question, and this can be done by avoiding overspending so you can pay your bills on time. 

What is a Billing Cycle?

The period for which a credit card bill is generated is known as the credit card billing cycle. For instance, let’s say your credit card bill is generated on the 12th of each month. Your billing cycle will begin from the 13th of the last month and continue until the 12th of the present month.

To be able to plan your finances better, understanding your individual billing cycle is important. Billing cycle dates vary from individual to individual and card to card. Typically, this cycle spans an entire month but can last for up to 45 days on high-end cards. 

Importance of Credit Score

When you know how to use a credit card wisely, keeping in mind your billing cycle and how to plan expenses accordingly, you can be sure of having a good credit score. A credit score is a three-digit numerical value generated by an official credit agency to summarize your creditworthiness. The credit score is generated by CIBIL (the Credit Information Bureau of India Limited) in India, and informs concerned parties of your financial health, taking into account your credit history. The score is within a range of 300 – 900, and a score that falls nearer to 900 is considered good. Most banks and NBFCs consider a credit score of 750 as adequate to make you eligible for a loan or credit card approval, assuring lenders that you are financially stable. 

Your Credit Score and Billing Cycle

Once you know what is a billing cycle and keep in mind your own, you will discover how it affects your credit score. While the billing cycle may not have a direct impact on your credit score, things like missed payments, paying only minimum due amounts etc. can have a negative impact on your credit score. For example, if you overspend during your billing cycle, you get an inflated bill to pay.

If you cannot pay the bill in part or whole, you miss a payment and balances are carried forward to the next billing cycle. Hence, you stand to acquire debt. This means that your finances are in trouble and your credit score will be low. Planning your expenses in such a way as to curtail flagship purchases or move them to the next billing cycle will avoid overspending. 

The Credit Card Advantage

Issuers of credit cards report credit card-related information to credit agencies every month or so. If you get a good credit card like the Bajaj Finserv RBL Bank SuperCard, you benefit from a number of rewards and you can use it wisely. The Bajaj Finserv RBL Bank credit card has four uses in a single payment tool, being a credit card for EMIs, loans, cash and credit.

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