The Reserve Bank of India (RBI) has recently issued credit card rules with an aim to protect the interest of customers.
As part of the 26-page document, the central bank said that cardholders should be provided with a one-time option to modify the credit card’s billing cycle as per their convenience. This new rule will be effective from 1 July 2022.
The billing cycle is the period between the expiration dates of two consecutive bills. Your payment due date will typically be 15-25 days after your billing cycle ends.
Suppose, your most recent billing cycle is from April 11, 2022 to May 10, 2022. The payment due date may fall on or before June 4-5, 2022.
The beginning of the billing cycle till the payment due date is the interest free period that the cardholder enjoys for transactions done during the billing cycle. Payments made after the due date attract interest and penalty apart from impact on credit score.
When the RBI rules on credit cards come into effect, you can choose to change the billing cycle in such a way that payments are made on a day that suits you and your cash flow.
For example, if you want all your payment due dates, say, before the fifth of every month, you can change your credit card billing cycle accordingly.
Moreover, this RBI move also helps when you have multiple credit cards with multiple due dates. Card issuers do not follow a standard billing cycle for all credit cards issued. In this case, you can use the one-time revision option, if you want all the due dates to be on the same day or before a specific day of the month.
“The flexibility now introduced is a welcome change and provides cardholders with significant benefits in managing their finances,” said Mayank Mehta, Partner, Pioneer Legal.
For salaried individuals, Mehta suggests aligning the due date of payment with the receipt of salary to budget the payments. He believes in keeping all the bills in sync to avoid multiple payments and due dates.