Two-Cycle Billing

Two-cycle billing is a billing strategy used by credit card companies to calculate finance charges. The Credit Card Act of 2009 placed certain restrictions on two-cycle billing (also called double-cycle billing).

Using the two-cycle billing strategy, a credit card company will determine the amount of finance charges by calculating the average daily balance by using the average of two billing cycles instead of just one. The two cycles considered are the current cycle, as would be used in average daily balance method, and the previous month’s cycle.

This method works best for credit card uses who always have a very stable balance from month to month that does not fluctuate. Due to the average of two months being used, if the card only holds a balance some months, the credit card user will be charged more than with the average daily balance method.

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