Double-cycle billing explained

Double-cycle billing is a method of computing finance charges that is used by some, but not all, credit card companies.

To explain how double-cycle billing works, it helps to first take a look at what it is not. A single-cycle billing method uses the balance from only the current billing period to calculate finance charges. With single-cycle billing, the previous month’s balance does not factor into the computation of finance charges for the current month.

A double-cycle billing method, on the other hand, uses the balance from both the current and the previous billing period to calculate finance charges. This can add up to much higher finance charges over time for those who carry a balance on their credit card from month to month and do not pay off the card in full each month.

Keep an eye out for this type of billing when you are considering applying for a new card. It is also a good idea to check the terms and conditions for the cards that you already own and see if any make use of double-cycle billing. Knowing this information can, quite simply, help you save money.