How do you get 45-day interest free period while credit card statement is sent every month?

Have you seen any credit card advert wherein the bank has asserted that the interest-free period is 45-day long? But how is the period 45-days long when the card statement is released every month?

For this, let us understand two concepts of credit card billing cycle and the last date of bill payment.

Billing cycle: Credit card's billing cycle is the 30-day period during which all transactions are clubbed and added to the final bill.

Last date: Once the billing cycle is complete, banks typically give 15 days to clear the bill, which begins with the end of the billing cycle. So, the total time period becomes 30 days for the billing cycle + 15 days for clearing the payment i.e., a total of 45 days.

If Mr A gets a credit card for which the time period is between 1- 30, then all transactions incurred between Jan 1 to Jan 30 will be added to the bill. The credit card bill will be sent to the user on Jan 31 and s/he will be given two weeks to clear the payment. This means he will have time until Feb 14 to make the payment.

This means the user gets a total of 30 days + 14 days during which he is not liable to pay any interest.

However, if the user clears the bill after the expiry of this 45-day period, the interest will accrue right from the day of transaction and not from the day after the expiry of the last date. For example, if he makes payment 10 days after the last date, he will be entitled to pay interest for 55 days (45+10) and not 10 days.

Therefore, the interest-free period is crucial, and card users should refrain from missing the deadline of bill payment.

Interest free period

When does the card holder get a 45-day interest free period?

The card holder stands to get 45 days only when the transaction is carried out on the first day of the credit cycle. In the above case, if he buys something on January 1, he will be entitled to get 45 days until the last date of the bill payment which is Feb 15.

As the month rolls on, his interest free period's duration gets shortened. For the transaction carried on the last date, the interest free period will only be 15 days. This is why the interest free period can be as long as 45 days but it can be shorter as well based on the date of transaction.

(Note: Using a credit card carries its own set of risks)