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Your statement period closing date is one of the most important things to remember about each credit card account, but as TPG Senior Points & Miles Contributor Jason Steele explains, it’s far from the only one date to keep in mind. Keep reading for a rundown of all the important items that belong on your travel rewards calendar.
They say time is money, and this statement is especially true when it comes to credit cards. In today’s post, I want to explore how the calendar affects your credit cards, your credit score and your travel rewards. I’ll also discuss how some credit cards offer specific benefits based on your account membership year versus the calendar year.
How the Monthly Billing Cycle Works
Each credit card account has 12 monthly statement periods per year, and each billing cycle has a statement closing date along with a payment due date. When your statement period closes, the bank issues a billing statement that determines how much you owe, and the amount of rewards you’ll receive. There’s a grace period between the statement closing date and the payment due date that varies between 21 and 25 days, depending on the card. During this period, you must pay your statement balance in full to avoid interest charges.
Since the CARD Act of 2009 took effect, credit card issuers have been required to make each account due date the same each month. Normally, you’re assigned a due date when your account is opened, but most card issuers will let you set your own payment due date as well. This means that if your card’s payment due date is in the first half of the month, your statement closing date will be during the previous month. And since each month varies in length between 28 and 31 days, your account’s statement closing date will vary in order to keep the same-length grace period and the same payment due date, as required by law.
Optimizing Your Statement Cycle
You should only use travel rewards credit cards if you can avoid interest charges by paying your statement balance in full and on time. Still, about 50% off all American credit card users regularly carry a balance. If you’re one of these people, you’ll be better off using a credit card with a low interest rate or a promotional financing offer, not a rewards card, since the points or miles you’ll earn aren’t valuable enough to justify the higher interest rates offered by travel rewards credit cards. In addition, those who don’t pay their balance in full will want to avoid the dings to their credit score that come with carrying significant debt or making late payments.
If you always pay your entire statement balance each month and your goal is to stretch your finances as far as possible, you’ll want to postpone large expenditures until just beyond your statement closing date. For example, if your statement closes on June 5 and your payment is due on June 26, any purchase you make on the 4th will have a payment due on the 26th. But if you postpone a large purchase until June 6, the charge will appear on the following month’s statement. Then, you’ll have until July 26 to pay for that purchase, giving you an additional 30 days of interest-free grace period.
On the other hand, if your goal is to receive your rewards as soon as possible, you’ll want to use the opposite strategy. With most credit cards, your points or miles will be credited to your account within a day or two of your statement closing date. By making major purchases just before your statement closing date, you’ll receive your rewards sooner, although you’ll also have to pay for your purchases sooner. Note that the major exception to this rule is American Express, which has its own peculiar timeline of awarding Membership Rewards points.
Another important exception to this formula is pending payments. Some charges are listed as “pending” on your statement for a day or two after the transaction before they officially post. If a purchase is still listed as “pending” at midnight on your statement closing date, it will not appear on that month’s statement. This could be good news if you’re trying to delay paying for the purchase, but it could also be a disappointment if you were hoping to receive rewards from that purchase as soon as possible — or if you needed that purchase to count toward a minimum spending requirement.
Since you never know if a purchase will be listed as pending — or how long it will remain so until posting — you should always build in a few days’ cushion before your statement closes if your goal is to have a charge appear on your bill that month. Credit card issuers typically caution customers to “wait one to two billing cycles” to receive your rewards in order to account for this possibility.
If you use credit cards to earn travel rewards, you know how helpful a good sign-up bonus can be. Nearly every credit card that offers a sign-up bonus requires you to meet a minimum spending requirement within a specified time period, most commonly three months or 90 days. Exceptions include cards that offer a bonus after your first purchase, such as the Delta Reserve Credit Card from American Express, which is currently offering 10,000 MQMs and 10,000 miles after your first swipe (though it does come with a $450 fee).
For sign-up bonuses that require meeting a minimum spending requirement, the time period given to reach it is not calculated based on your billing cycle. Unbeknownst to many, the clock on a sign-up bonus starts the day your account is opened, which is typically the same day your application is approved. This is not the day your credit is mailed, received, activated or first used. To be absolutely sure of how long you have to meet a minimum spending requirement, it’s always best to contact your card issuer.
When you’ve met your card’s minimum spending requirement within the specified time period, you’ll have to wait until your next statement cycle closes before receiving your promised bonus. Typically, the points, miles or cash back appear within 1-2 days of your statement cycle closing, so long as you’ve met the minimum spending requirement during the previous statement cycle and within the minimum spending period. I’ve been able to receive a small extension of time to meet the minimum spending requirement, upon request, so if you somehow fall short it never hurts to ask.
Annual Fee Due Dates
Although it can vary by card issuer, your annual fee is typically billed on your account anniversary, one year after your account is opened. Most issuers give you between 30 and 60 days to close your account and receive a refund of your annual fee. And in some cases, card issuers will offer you a prorated refund of your annual fee if you close your account in the middle of your cardmember year.
The Calendar Year vs. the Cardmember Year
Various credit cards offer “annual” benefits such as fee credits, elite status points and category spending bonuses, but it’s important to know which ones are based on the calendar year (January 1-December 31) and which are based on your cardmember year (account anniversary date). For example, cards like The Platinum Card from American Express and the Ritz-Carlton Rewards Credit Card offer annual fee credits that reset every year on January 1. For more information, see my post on How to Take Full Advantage of Credit Card Benefits in 2016.
Annual credit card benefits that are based on your account anniversary date include 5x Ultimate Rewards on up to $50,000 in combined spending on telecommunications and office supplies with the Ink Plus Business Card; the $30 statement credit toward in-flight Wi-Fi with the Discover it Miles; and the bonus of one free weekend night for spending $10,000 in purchases on the Citi Hilton HHonors Reserve Card.
The points and miles hobby is full of tips and tricks for maximizing your rewards, so it’s no surprise that there are plenty of ways to optimize your credit card billing cycles themselves to your benefit. From knowing your statement closing date so you can time a big purchase just right to understanding the timeframe for a sign-up offer so you don’t miss out on a valuable bonus, these tips can help you maintain a good credit score while reaping great travel rewards.
Do you have any tips for staying on top of important credit card dates? Share them in the comments below!
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