Say goodbye to double-cycle billing

What is double-cycle billing and how did the Credit CARD Act address it?

When you compare credit cards, you look for the best APR. But believe it or not, before the Credit CARD Act of 2009, some credit card companies were charging your daily rate to the average of your balance over two billing cycles instead of one.

So where you might have had a lower average balance during the most recent billing cycle, the credit card company would take the prior billing cycle into account as well. This was called double-cycle billing and was unfair to consumers.

Thanks to the Credit CARD Act, the practice of double-cycle billing is prohibited. Now, credit card companies cannot consider any other balance in the calculation of finance charges beyond the most recent, and they must not charge interest on those balances which have been paid off on time.

The only exceptions to this are adjustments to finance charges based on resolved disputes.

With this change you may notice a small decrease in the amount of interest you are charged on carryover balances each month. This change helps your wallet and your family and makes those sale-priced purchases on your credit card remain sale-priced.

Credit Cards tips: This tip was originally posted on 7-28-2010 at 10:00 am.

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