How are the Interest- free days calculated for my credit card?

Last time we discussed about “What is a Virtual credit Card?” to help you avoid any fraudulent transaction on your Credit Card. In this article we are going to discuss about how to calculate the interest-free days for your credit card.

Nowadays, everyone uses a Credit Card and we are slowly and gradually realizing the benefits and advantages of doing so. Using the Credit Card for all occasions becomes more useful when you know everything about your credit Card. This can help you save a lot for you and you may even end up paying even less amount in most of the cases if you know how to make the best use of your credit card.

Photo Credit: michael_swan

One of the most important components in mastering the use of Credit card for optimum use is to know the interest free days for your credit card.

In this article, we will learn how to calculate the interest free days and how to make the most out of your credit card using that knowledge.

What all I need to know?

Before going any further, you should know the following details of your Credit Card:

Credit Card Billing Cycle: The date when you statement is generated.

Payment Due Date: The last date for your Credit Card Bill payment.

Now, I will try explaining you the concept by quoting an example.

Lets take an example where Sabby holds an ICICI Bank Credit Card. The billing cycle for his Credit Card is on the 15^th of every month and your Payment due date is the 3^rd of each month. Now, every bank gives “upto 50-52 Interest-free days” to pay your bill. Now, what we have to understand here is that what does this word “upto 52 days” means? Because every bank uses this same phrase only.

This is because it is in our hands how many days that you can avail of as interest-free days. Confused? Don’t worry, I will explain.

Take for example as I said above that your statement is generated on the 15^th of December, 2009 for which Sabby has to make the payment on or before 3^rd of the following month i.e. 3^rd January, 2010 (in our case)

Case 1:

If he makes a purchase on the 14th of the month with his statement generating on 15th, he will have interest free period until the 3rd of the following month. So, in this case till the 3rd Jan,10 he will make the payment of the purchase done on 14 Dec. He will have the luxury of only 20 interest free days to pay the bill without being charged any interest on it.

Hence, in this example, his interest-free days are reduced to only 20 days.

Case 2:

But if Sabby goes by the smart strategy of increasing his interest free period, he will wait for some day and control his buying spree till the 16th of December, 09. Doing so, this purchase will be included in the Jan, 2010 statement (as December statement will already be generated on 15th) for which he will have to make the payment for his credit card bill till 3rd Feb 2010.

Hence, in a way in the second instance his interest-free days are increased to 51 days.

Conclusion:

Taking the above cases into accounnt, one may get a minimum of at least 20 interest-free days on your purchases but you can obviously increase them to 50-52 days if you make your purchases smartly in the initial stages of your billing cycle.

Hence, always keep in mind this thing so as to make an intelligent decision about making your purchases accordingly to ease the pressure on you to make payments availing the full advantage of the interest-free period

What are your views on this topic, what strategy do you follow while making your payments? If you have any other strategy to share with others, please put your comments below. your views are highly appreciated.

Tagged as: Credit Card Bill, Credit Card Payment, Credit period, Interest-free days