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What Is the Closing Date on a Credit Card?

Published May 22, 2023

3 min read

Key points about: credit card closing dates

Your credit card closing date is the last day of your billing cycle.
Your credit card statement is generated at the end of your closing date, and the due date is at least 21 days later.
If you don’t pay your credit card's minimum payment between the closing date and the due date, you may incur interest and late fees.

If you're looking at your credit card statement, you may wonder what it means when it refers to the closing date. You may even confuse the term with your credit card's due date. In order to keep up with your credit card payment each month and prevent your credit score from decreasing, it's important to understand the difference between the two.

What is a credit card closing date?

The credit card closing date is the last day of your credit card's billing cycle. On your credit card's closing date, your credit card company adds up all of your transactions from the last month, and any interest charges you owe, and generates a credit card statement. Any purchases that have not been posted to your account by the end of that day will now be part of the next billing cycle.

The amount on your credit card statement is the amount you are responsible for paying on the payment due date. If you don’t pay this amount on the due date, you may be subject to late fees and a decline in your credit score. If you at least make the minimum payment, which will also be generated on the closing date, you can avoid a late payment fee.

What is the difference between your credit card closing date and payment due date?

Your credit card payment due date is the day that you must pay at least the minimum amount determined as of the closing date of your last billing cycle to avoid any late fees. The due date is at least 21 days after the closing date, when the credit card statement was generated. That 21-day period is referred to as a credit card grace period. During this time, you won't owe anything unless you carried a balance forward from the previous billing cycle, or you made transactions which don’t have a grace period, like a cash advance.

If you pay your credit card bill during the grace period, you can avoid paying interest on new purchases. But paying anything other than the full balance means that the grace period will no longer apply, and interest will be charged on new purchases and on the balance.

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How your credit card closing date affects your credit score

Once a month after your closing date, your credit card issuer may report your credit card balance and other account information to the credit bureaus. Credit bureaus, or credit reporting agencies, collect your credit history from your financial institutions and use the data to compile your credit report. This is where it becomes essential to maintain a low balance. The lower your balance, the lower your credit utilization ratio. The credit utilization ratio is the total balance of all your accounts divided by the total credit limit on all of your credit cards. According to the CFPB, this should be kept at under 30% to maintain a good credit score, but the lower, the better.

Did you know?

Your credit utilization makes up about 30% of your credit score, making it the second most significant variable in calculating your credit score. But the credit bureau doesn’t just receive your credit card balance; they also know of any late payments on your record. You should be making at least the minimum payment by your due date, but best practice is to keep your balance as low as possible. Paying on time encourages you to keep your balance low and ensures that you do not miss a payment on your credit card bill. Your payment history is the most significant variable affecting your credit score, accounting for 35% of the score on your credit report.

Should I pay off my credit card before the closing date?

Giving yourself ample time to pay the full amount before the due date ensures that you are never late on a payment. Making on-time payments is crucial to your credit score. The balance reported on your statement is used for your credit utilization ratio, so paying the balance before the statement date can improve your credit utilization ratio and could also help your credit score if your utilization ratio was previously high. You also avoid credit card debt in the long run by making it a habit to stay ahead of your spending. Most credit card companies apply a daily interest charge based on your APR, which compounds over time. You can save on these daily interest charges also by paying early.

While paying the minimum amount is important if you want to avoid late fees, you generally cannot avoid interest fees unless you pay the full amount. Your credit card closing date and due date are important credit card dates to bear in mind if you want to keep your credit score high and avoid interest payments.

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