FAQ: What is a Monthly Credit Cycle?

Monthly Credit Cycle Basics

We all know what it feels like at the first or middle of every month. This is when the monthly bills arrive. Whether it is your rent, dry cleaning bill or mortgage payment, you are required to pay them on time each month. If you have a credit card, you know to expect in your statement each month. This is based on it’s monthly credit cycle.

What to Expect From Your Monthly Credit Cycle?

Your credit card statement arrives each month to tally up your monthly spending. Most cards allow you to carry a balance on the account. You will, however, be required to pay a fee on your APR (Annual Percentage Rate). This rate is calculated by a percentage of your total spending, depending on the card and what the APR may be. If you carry a balance, each month you will see an additional fee on your statement. This is the fee charged by the credit card company that allows you to pay off your balance over time.

Avoiding Charges

When you receive your monthly billing statement from certain cards, you may not see an APR charge.  These cards require you to pay your balance in full each month and, therefore, don’t need to charge and annual rate. In addition, these types of cards usually do not have spending limits. It is important to know what type of card you have and what your spending limits are before using your card.

When opening and charging to a credit card, it is up to you to know what is involved with your monthly billing cycle. Higher APR rates can sneak up on you and, if you choose to carry a balance, you are responsible for these charges. Credit cards make life easier but you should always check the facts and aware of low credit card rates to take advantage of.