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What Is a Billing Cycle?

A billing cycle is the regular period of time wherein a consumer receives the invoice for the products and services that he utilizes within that period of time. The billing cycle varies depending on the provider. Some may be as short as a month, while others may be as long as one year. Billing cycles are inherent to a lot of products and services and also serve as reference points for the calculation of interest and other fees.

One of the most common usages of the term billing cycle is in the credit card industry. Every credit card holder is familiar with his billing cycle as it determines how much one should pay. The billing cycle for credit cards is usually monthly, at the end of which, the credit card holder has to pay a minimum amount. Additionally, if the credit card holder is unable to pay the whole balance on the credit card for one month and has an existing balance in the next month, additional charges such as interest and finance charges are computed within that billing cycle. The cut-off date is also part of the billing cycle. This is the last date which is included in that billing cycle; that is, purchases made after the cut-off date will not be included in the current bill. Instead, those purchases will be part of the next billing cycle.

Often, a service provider will determine the billing cycle and cut-off dates at the outset. However, a consumer may request for the adjustment of the dates. This is highly recommended so that you can time the payment dates to the dates that you receive your wages.

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