Stop the Late Fees! What is the Difference Between Statement Due Dates and Closing Dates ?

Working and raising a family can be amazing experiences, but keeping track of finances can be a headache. One common source of confusion is credit card statements. Terms like "statement due date" and "closing date" are often used, leading to missed payments and late fees.

This guide will break down these terms and equip you with practical tips to avoid those pesky charges.

Statement Due Date: The Drop-Dead Date for Payments

Think of the statement due date as the red line in the sand. It's the last day you can make a minimum payment on your credit card without a late fee. Missing this deadline can damage your credit score and incur additional interest charges.

Here's how it works:

• Billing Cycle: This is the period during which your credit card activity is tracked. It typically lasts around a month but can vary depending on your issuer.

• Statement Closing Date: This marks the end of your billing cycle. Your upcoming statement will reflect all your purchases made up to this point.

• Statement Due Date: This falls typically 21-25 days after your closing date. It's the final day to make at least the minimum payment to avoid late fees.

Example: Let's say your statement closing date is June 15th. Your statement will be generated with all your purchases until that date, and the due date for a minimum payment might be July 10th.

Tip :

• Set Up Automatic Payments: Schedule automatic payments for at least the minimum amount a few days before the due date. This ensures timely payments and eliminates the risk of forgetting. Paying your bills on time helps improve your credit score.

• Consider Early Payments: Make payments before the statement closing date. This minimizes interest charges, especially if you carry a balance.

Closing Date: When Your Statement Takes Shape

The closing date is when your credit card company stops recording transactions for your current billing cycle and starts preparing your statement. SoFI says your credit card closing date determines your billing cycle, usually 28-31 days.

Here's the key difference:

• Transactions made after your closing date will appear on your next statement.

Example: Going back to our previous example, if you make a purchase on June 16th (after the closing date of June 15th), that transaction will show up on your July statement, not the June statement.

Tip :

• Strategic Purchases: If you're nearing the end of your billing cycle (close to the closing date), consider delaying non-essential purchases until the next cycle. This can help you manage your upcoming statement and avoid carrying a balance into the next month.

Remember:

• Your closing date and due date are usually found on your credit card statement or by logging into your online banking portal.

The Grace Period: Your Buffer Zone (But Use it Wisely!)

Many credit card companies offer a grace period between your statement closing date and the due date. You won't be charged interest on your balance during this time if you pay it in full by the due date.

However, this grace period is not a free pass to carry a balance! Interest starts accruing on any remaining balance after the due date, even during the next billing cycle.

Understanding the difference between statement due dates and closing dates empowers you to manage your finances effectively, especially when juggling the complexities of work and raising a family. By utilizing the provided tips and staying on top of your billing cycle, you can say goodbye to late fees.

A good Credit Score can save you money on your next major purchase…

A good credit score can save you money. A credit report is a broad view of an individual’s credit history. Gives information on whether an individual pays bills on time, the type of credit owned, length of accounts, amount of credit used and if new sources of credit are being sought.

Three national credit bureaus maintain credit reports: Experian, Transunion and Equifax.

Good credit = more money in your pocket

Factors that affect Credit score

1.   Payment history (35%): Ability to pay bills on time; affects credit the most.

2.   Credit Usage (30%): Amount owed. Keeping credit utilization under 30% is strongly recommended for best credit building. (For example if $10,000 total, then keep credit use under $3000).

• Credit Utilization: Utilization of available credit on revolving accounts.

•  Amount Owed on Installment Loans such as auto loans and Mortgage with set loan term and set amount of payment

3.   Age of credit (15%): Also known as length of history; Length of time your revolving accounts have been open and length of installment accounts. It is an average of ALL accounts

4.   Type of credit (10%): Credit mix. The different types of credit accounts.

5.   Credit Inquiries (10%): Authorization to look up credit. Multiple inquiries negatively affect the credit score. Grouping inquiries within the same month will help to minimize effect on credit score.

Before you develop a plan to fix your credit score, you need to know what is on it.

Check your credit report to know what is on it. Annual Credit Report is a federally approved site that offers a free annual comprehensive credit report. Check your credit report at least annually to stay on top of its content.

4 Ways to Improve Your Credit Score

Your credit score is an important part of your financial plan.

Taking measures to improve your credit score without increasing your debt is important because a great credit score helps you build a solid financial foundation.
There a several ways to improve your credit score, but 3 factors play a huge impact on your credit score. They are :

Your payment history

This is your ability to pay your bills on time and also reflects any late payments you may have had. Of the 5 factors that are used to calculate your credit score, payment history has the greatest Impact on your credit score. To improve your payment history,

• Pay bills on time and in full

• Automate payments

Your Credit Utilization

This is the amount of available credit that you are using in your cards. The lower your credit utilization, the better your credit.
Your can improve your credit score by decreasing your credit utilization.
To do this, you should:

• Pay down debt or pay credit cards in full each month

• Increase total limit on credit cards.

The third factor that can help improve your credit score is:

The length is your credit history.

This is how long you have had your credit accounts. It can be challenging to make any alteration to the credit history as it is based on time. But some taking precautions to decrease the length of your credit history is helpful.

• Avoid opening new accounts

• Become an authorized user on someone’s credit card with great credit to lengthen your credit history.
  

Other things you can do to improve your credit score include;

• Get a secured credit card to establish credit history

• Use the Annual Credit Report check credit report for any errors and correct them immediately

• Avoid applying and opening new credit accounts frequently

• Keep credit age greater than 5 years

Experian also suggests using Experian boosts to improve your credit score.

Experian Boost gives you credit for paying your utility bills on time; a factor that is not otherwise included in the calculation of your credit score.