The Reserve Bank of India (RBI) recently issued credit card regulations aimed at safeguarding the interests of customers.
As part of the 26-page document, the central bank stated that cardholders must be provided a one-time option to modify the billing cycle of the credit card as per their convenience. This new rule will be effective from 1 July, 2022.
The billing cycle is the period between the closing dates of two consecutive bills. Your payment due date will be generally 15–25 days after your billing cycle ends.
Say, your recent billing cycle is 11 April, 2022 to 10 May, 2022. The payment due date could fall on or before 4-5 June, 2022.
The beginning of the billing cycle till the payment due date is the interest-free period that the cardholder enjoys for the transactions done during the billing cycle. Payments made after the due date attract interest and penalty charges in addition to the impact on the credit score.
When the RBI regulations on credit cards become effective, you can opt to change the billing cycle such that the payment becomes due on the day that suits you and your cash inflows.
For instance, if you want all your payment due dates to be, say, before the fifth of every month, you can accordingly change your credit card billing cycle.
Further, this move by RBI 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 make use of the one-time modification option, if you wish to have all due dates on the same day or before a specific day of the month.
Mayank Mehta, Partner, Pioneer Legal said, “The flexibility now offered is a welcome change and provides significant benefit to the cardholders in managing their finances.”
For salaried individuals, Mehta suggests aligning payments due date with the receipt of salary, to budget the payments. He believes in having all the bills in sync to avoid multiple payments and due dates.