Billing cycle

A billing cycle is the biller's month, and it was set by the day you opened the account rather than by the calendar. A card whose cycle closes on the 25th collects every purchase from the 26th of one month to the 25th of the next onto one statement, issues that statement on the closing date, and sets a due date a few weeks after it. A purchase belongs to the cycle it posts in, so two purchases two days apart can come due a month apart, which is the mechanism behind a card's grace period and the reason a statement never matches a budget month.

In a sentence

• "My card's billing cycle closes on the 25th, so the groceries on the 26th are on next month's statement."
• "The billing cycle ran from August 26 to September 25, closed at $412, and the payment is due October 20."
• "A billing cycle is the biller's month, not the calendar's, and the two line up only by coincidence."

How it works

1. The cycle opens the day after the last one closed: a fixed day each month on a card, the last meter reading on a utility, the last charge on a subscription.
2. Everything that posts during the cycle goes on its statement: purchases, credits, fees, interest and payments.
3. On the closing date, the statement is issued and its balance is fixed.
4. The due date follows the closing date, about three weeks or more later on a credit card, on the same day each month; two to three weeks later on a utility bill. Paying a card's statement balance in full by then keeps the grace period, so the cycle's purchases cost no interest.
5. The next cycle is already open. Purchases after the closing date go on the next statement, due a month later.

Statement balance = previous balance − payments and credits + new charges + interest and fees

An example

A card whose cycle closes on the 25th, with the payment due on the 20th of the following month.

The September statement closes at $412 with the groceries in it; the fuel bought two days later is on the October statement, due November 20. Paid in full by each due date, neither purchase costs interest, and the fuel is carried for 55 days at no cost. In a budget, both count in September, on the days they happened, and the statements that eventually collect them are billing artifacts.

Why it matters

The cycle decides when the money leaves, and the budget decides what it was for; keeping the two apart is most of what makes a credit card safe to budget with. A budget that counts purchases by statement date mixes two calendar months into one figure that matches neither, and one that counts the card payment as spending counts every purchase twice. The cycle also sets the deadlines: the closing date is the last day a purchase can join this statement, the due date the last day to pay it without interest, and a subscription's renewal is charged for the cycle ahead, so a cancellation a day after it pays for a month that will not be used.

Billing cycle versus a calendar month

A calendar month is the unit a budget and a paycheck run on; a billing cycle is the unit a biller runs on, and it starts on whatever day the account was opened. A card that closes on the 25th holds the last six days of one month and the first twenty-five of the next, so its statement equals a month's spending only by coincidence; the fix is to count each purchase in the month it happened and treat the statement as the bill that settles them. Where the two calendars fight, many card issuers will change the closing date, which moves the due date with it. See How to budget with a credit card without overspending.

Common questions

Is the closing date the same as the due date? No. The closing date ends the cycle and fixes the statement balance; the due date, about three weeks or more later on a card, is the day the payment for that statement must arrive. Paying in full between the two is what keeps the grace period. See Due date.

Can I change my billing cycle? Often. Many card issuers let you choose a new closing date, which shifts the due date with it; utilities usually let you move the due date; a subscription's cycle is fixed by the signup day and moves only if the merchant agrees or you cancel and start again.

Do I pay interest on purchases made during the cycle? Not if the statement balance is paid in full by the due date, because of the grace period. Carry any part of it and interest runs on the balance, and new purchases usually accrue interest from the day they are made until the balance is paid in full again. See Grace period.

How long is a billing cycle? On a card, 28 to 31 days; on a utility, the time between meter readings; on a subscription, the period each charge pays for, a month or a year.

Go deeper

• How to budget with a credit card without overspending budgets each purchase on its own day and pays the statement from money already counted as spent.
• Annual versus monthly billing, and when the discount is worth it finds the break-even month when a subscription's cycle stretches to a year.
• How to line up bill due dates with your paychecks moves the dates that can move, a card's closing date among them.

Where it shows up in Zypper

Zypper budgets by the purchase date, not by the cycle. Card transactions arrive as they sync and count toward the category's Spent figure as soon as they arrive, pending or posted, on the day they happened, so the budget month holds the purchases made in it whichever statement they land on. When the statement is paid, both sides show up as transactions, the payment leaving checking and arriving on the card, and Zypper links them automatically as one transfer, not income and spending, so the payment never reads as spending. See Splitting and linking transactions and Creating your budget for the details, or get started with Zypper to budget your card by the day it was used.