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Truth be told, credit cards can be quite confusing. With so many calendar dates tied to your card, it's easy to misunderstand the importance of some critical date, and as a result, miss out on some of the rewards. But, by fully comprehending the different terminology, you'll be much more aware of those important dates to note so you don't miss a payment or any rewards.
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How a credit card's monthly billing cycle works
Each credit card account has 12 monthly statements per year, and each billing cycle ends on a predetermined statement closing date. Billing cycles are generally close to a month long, but can vary by a few days. This closing date is the day each month that divides your account's previous billing period from its next one. When your statement period closes, typically at midnight, the bank issues a bill that determines how much you owe and the amount of rewards that you have earned for that period.
With most credit cards, the rewards you've earned each month will be listed on your statement and credited to your account shortly after the closing date. Sometimes this happens within hours of your statement being generated, but sometimes it can take a few days. In my experience, these delays tend to happen when a credit card issuer is transferring reward points or miles to a partner like an airline or hotel loyalty program.
Following your statement closing date, there's a grace period before your payment due date (there are some subprime cards that have no grace period, but credit cards from major issuers have one). This period is required by law to be at least 21 days, and typically varies between 21 and 25 days depending on the card.
You can pay your statement balance in full by the due date to avoid interest charges. However, you must make at least the minimum payment before the due date or face late fees and possibly penalty interest rates.
Related: Does it hurt to pay off your card balance before the billing cycle ends?
How your credit card's due date and closing date are determined
Since the Credit CARD Act of 2009 took effect, credit card issuers have been required to have the due date land on the same date each month so users know that they can make their payment on a particular date and always have it credited on time. For example, if your statement is due on March 15, then it will also be due on April 15, May 15, June 15 and so on. You can ask your credit card issuer to adjust your due date. Some banks allow you to make this request online when logged into your account, while others will require a phone call or chat session.
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Know that by choosing your due date, you'll be altering your statement closing date as well.
Related: The history of credit cards
Because the due date is a fixed date of the month, and it has to occur a set number of days after the statement closing date, the statement closing date can't be fixed as well. The closing date will also likely be the month before the due date because there is an approximate three-week grace period before payment is due.
Related: Tip: Amex's 'Please Pay By' date isn't the same as your payment due date
Since months vary from 28 to 31 days, your statement closing date will vary by a few days on shorter months. For example, if your due date is on Aug. 15, and your account has a 25-day grace period, then your statement closes 25 days earlier on July 21.
Stretching your finances while avoiding interest
Now that you know how your credit card's statement cycle works, you can use that information to your advantage. If you are trying to avoid interest by paying your entire statement balance each month (which you should do when earning rewards to avoid negating the value of them), then your goal may be to stretch your finances as far as possible. If that's what you're after, then you'll want to postpone large purchases until just beyond your statement closing date.
For example, if your statement closes on June 5 and your payment is due 21 days later on June 26, any purchase that posts to your account before June 5 will be due later that month unless you are OK accruing interest. But if you postpone that large expenditure 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, potentially giving you an additional 30 days free of "interest" depending on your account specifics.
Related: The top no-annual-fee credit cards with a 0% intro APR
Earning rewards sooner
On the other hand, if your goal is to have your rewards post to your account as soon as possible, then you'll want to use the opposite strategy. By making a large purchase just before your statement closing date, it will be included in your next statement, and you should receive your rewards shortly afterward.
By making major purchases just before your statement closing date, you'll receive your rewards sooner, but you'll also have to pay the bill 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 several days 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.
Always remember that there's no way to predict which payments will be listed as pending or for how long. So to be safe, you should always assume a payment could be listed as pending for up to three days. In fact, the reason that credit card issuers caution you to wait one to two billing cycles to receive your rewards is to account for delayed transactions.
Just know that even if you pay for your purchase right after it is posted to your account, that will not speed up earning the rewards. Regardless of when you pay your bill, you will not receive your rewards until after your monthly statement closes.
Related: When do rewards post to your account?
Making sure you earn your sign-up bonus
A generous welcome bonus can be extremely valuable when you're earning travel rewards from your credit card. Most credit cards that offer these bonuses have a minimum spending requirement that you have to meet within a specified time period, most commonly three months or 90 days.
Related: 10 easiest credit card sign-up bonuses to earn
For bonuses that require a minimum spending requirement (which is almost all bonuses), the time period given to reach it is not calculated based on your card's billing cycle. It can come as a surprise to many that the clock starts ticking on your welcome bonus the day your account is opened, which is typically the same day your application is approved. This is generally before you receive the card or account number — unless you receive the number online as soon as you are approved.
But generally, this is not the day your credit card is mailed, received, activated or first used. And most likely, this period you have to meet a minimum spending requirement won't align with your statement closing or due dates.
To be absolutely sure of how long you have to meet a minimum spending requirement, it's always best to contact your card issuer and ask when the last day is to meet your minimum spending requirement. When possible, I prefer to do this using the card issuer's secured message center. That way, you have the date documented.
Best practice, however, is to meet the minimum spending requirement as quickly as possible, to ensure there are no issues with receiving the welcome bonus.
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 a few days of your statement closing as long as you've met the minimum spending requirement during the previous billing cycle and within the minimum spending period. I've been able to receive a small extension of time to meet the minimum spending requirement on request, so if you somehow fall short it never hurts to ask.
Related: 11 ways to meet credit card bonus minimum spending requirements
Keep in mind though, if the card carries an annual fee — and it's billed right away — the annual fee amount is usually not counted as part of the minimum spending requirement. For example, if the card requires you to spend $3,000 within the first 90 days and the annual fee is $99, that means you have to spend $3,000 in addition to the $99 spent on the annual fee. It does not mean you only need to spend another $2,901 within the 90-day time frame.
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.
It will then appear on your next billing statement, just like any other charge or credit. 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.
Related: Guide to credit card annual fees
The calendar year vs. the cardmember year
Various credit cards offer annual benefits such as travel credits, elite status credits and category spending bonuses.
However, it's important to know which ones are based on the calendar year (Jan. 1 to Dec. 31) and which are based on your cardmember year (account anniversary date). For example, cards like the Platinum Card® from American Express and The Business Platinum Card® from American Express offer annual airline fee credits that reset every year on Jan. 1. Enrollment required.
Annual credit card benefits that are based on your account anniversary date include 5x Ultimate Rewards on up to $25,000 in combined spending on telecommunications and office supplies with the Ink Business Cash Credit Card and the up to $250 resort credit (enrollment required) that comes with the Hilton Honors American Express Aspire Card.
The information for the Hilton Aspire Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: Some great credit card benefits are based on cardmember anniversary, not calendar year
On cards like the Chase Sapphire Reserve, the $300 annual travel credit may run on a calendar or anniversary date, depending on when you first opened the account. Sometimes these benefit dates can be easily tracked then logged into your account, and for others, you may need to call or chat with the issuing bank if you're not sure.
Bottom line
The points and miles hobby is full of tips and tricks for maximizing your rewards, but it's also easy to make mistakes based on a misunderstanding of critical dates that affect your credit cards.
From knowing your statement closing date so you can time a big purchase just right, to understanding the time frame for a welcome 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.
Featured photo by Viktoriya Kuzmenkova/Getty Images.
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
