New Credit Card Billing Rules Effective From July 1, 2022

A new set of guidelines regarding debit and credit cards was issued by the Reserve Bank of India (RBI) recently. These rules include the closure of credit cards and billings, etc.

Any provisions relating to credit cards under the RBI Directions, 2022 (Credit Card and Debit Card – Issuance and Conduct) shall apply to every Scheduled Bank excluding Payments Bank, State Co-operative Banks, District Central Cooperative Banks and Non-Banking Financial Companies (NBFCs) that are operating in India. These rules will therefore be effective from July 1, 2022.

Some creditworthy points regarding credit card billing are discussed below:

  • Billing cycle of a credit card – A billing cycle is the period in which your credit card bill will be generated. As per the new rule, your billing cycle will begin on the 11th of the previous month and will end on the 10th of the present month. This will be the cycle if your credit card statement is generated on the 10th of every month.
  • No hindrance in billing statements – According to the RBI, card issuers must ensure that the bills/statements should be sent or emailed promptly to you (cardholder). So that you (consumer) have a sufficient number of days or at least a fortnight to pay the interest charged. This way repeated complaints about late invoicing can be avoided. Also, the RBI conveyed that card issuers must implement a sophisticated system that can ensure you (cardholder) help receive the billing statements on time.
  • Cardholder to receive a reply within 30 days from the date of complaint – Card issuers must necessarily check that there are no incorrect bills generated and distributed to cardholders. If you (cardholder) object to a bill, then the card issuer must explain, and, if necessary, submit documentary evidence to you (cardholder) within 30 days of the complaint date.
  • No charges should be imposed until the dispute is resolved – Transactions that you (cardholder) mention as “fraud” will not be imposed with any kind of charges until any type of issue between you and your card issuer is resolved.
  • Change the billing cycle according to cardholder preference – For all the credit cards that are issued, card issuers do not follow any typical billing cycle. So, in that case, you (cardholder) will be provided with a one-time opportunity to change your credit card’s billing cycle according to your preference.
  • Reversed transactions will be adjusted to payment due – Refunds for reversed or any failed transactions will be adjusted towards the ‘payment due’ amount from you (cardholder).
  • Mandatory approval from cardholders to increase the credit limit – Card issuers need to seek permission from you (cardholder) to increase the credit limit beyond a certain predefined limit in case of reversed transactions or refunds. The cut-off has been set as one per cent of the original credit limit or INR 5000, whichever shall be considered lower.

Finally, as per RBI Master Direction, the card issuers can reverse the credit transaction to your (cardholder) bank account, if there is no response or consent received from you (cardholder). Notwithstanding the cut-off, if you (cardholder) request the card issuer to reverse the credit amount outstanding in the card account into your bank account, the card issuer shall do it within three working days from the receipt of such request.

FAQs

1. What happens when I overpay my credit card balance?

If you overpay your credit card balance, the payment will result in a negative account balance. This means that the credit card company will owe you money. So, the next time you make a purchase with a credit card, the amount you overpay will count toward it.

2. Is it fine to pay a credit card early?

Yes! Because paying your credit card early or on time will help enhance your credit score. After your statement closes, your credit card issuer will notify your balances to the credit bureaus. Hence, paying your bill in advance will lower your overall balance.

3. What is a credit card grace period?

A grace period is referred to as the period between the end of a billing cycle and the date your payment is due. This is the time when you may not be charged interest as long as you pay your credit card balance in full by the due date.

4. How many days before my credit card due date should I pay?

Generally, you will have 20-25 days right from your statement closing date to your payment due date. This is referred to as the grace period and during this time, you need to gather money and pay back your credit card bill.

5. How can I avoid paying interest on my credit card?

Paying off your entire monthly statement balance within the grace period is one of the best ways to avoid getting into debt. So, as long as you are paying your balance before the grace period expires, you can absolutely make purchases on your credit card without paying any interest.