topic Re: BoA using 2 statement cycles to charge interest in Credit Cards

BoA using 2 statement cycles to charge interest

gdale6 — Fri, 24 Sep 2021 15:57:20 GMT

I just discovered BoA is using the 2 cycle statement for interest charges. Crooks these sobs all are. IIRC this is now illegal??

Re: BoA using 2 statement cycles to charge interest

Eyepinpools — Fri, 24 Sep 2021 16:31:13 GMT

Can you explain this?

Re: BoA using 2 statement cycles to charge interest

SoCalGardener — Fri, 24 Sep 2021 17:10:12 GMT

@Eyepinpools wrote:
Can you explain this?

Yes, please do! I'm baffled.

Re: BoA using 2 statement cycles to charge interest

simplynoir — Fri, 24 Sep 2021 17:11:10 GMT

Are we talking about trailing interest here?

Re: BoA using 2 statement cycles to charge interest

gdale6 — Fri, 24 Sep 2021 17:17:07 GMT

@Eyepinpools wrote:
Can you explain this?

Sure, I put a 2500 purchase on the card in May have been paying it down till i paid it completely off prior to the due date of my August statement and yet I was charged additional interest even though the purchase had been paid to zippo. Due date of the August statement was Sept 19 and it was totally paid off Sept 17 yet they charge me interest on my Sept Stmt.

Re: BoA using 2 statement cycles to charge interest

Anonymous — Fri, 24 Sep 2021 17:21:15 GMT

I think @gdale6 is referring to this: Double-Cycle Billing Definition (investopedia.com)

Banned in 2009 so it would be surprising if it was still explicitly used

ETA: oh, looks like it WAS trailing interest, which is certainly legal

Re: BoA using 2 statement cycles to charge interest

CreditPacMan — Fri, 24 Sep 2021 17:46:30 GMT

Bank of America always does that to me. I PIF before the due date, and the next months there is a small interest charge (sometimes as low as $2).

Chase also does that.

I don't know how this works, if my balance is zero what I am paying an interest for?

Re: BoA using 2 statement cycles to charge interest

simplynoir — Fri, 24 Sep 2021 17:48:59 GMT

@Anonymous wrote:
I think @gdale6 is referring to this: Double-Cycle Billing Definition (investopedia.com)

Banned in 2009 so it would be surprising if it was still explicitly used

ETA: oh, looks like it WAS trailing interest, which is certainly legal

Not all credit card companies do it but BofA is one of them

Re: BoA using 2 statement cycles to charge interest

Anonymous — Fri, 24 Sep 2021 17:53:07 GMT

@CreditPacMan wrote:
Bank of America always does that to me. I PIF before the due date, and the next months there is a small interest charge (sometimes as low as $2).
Chase also does that.

I don't know how this works, if my balance is zero what I am paying an interest for?

Let's say your statement is dated first of the month. You carried some charges on your July bill and your Aug 1 statement is for $100. You pay the bill in full Aug 5th say. But the $100 covered interest (and purchases) up to Aug 1, and since Jul wasn't paid in full daily interest (on average daily balance) continues to accrue up to the time payment is received later in Aug. So your Sep statement will contain interest charges. Since Aug is paid in full (so no extra interest is added) paying the Sep charge in full stops the cycle

Re: BoA using 2 statement cycles to charge interest

dumaine — Fri, 24 Sep 2021 21:19:49 GMT

Sounds like Residual Interest to me

Re: BoA using 2 statement cycles to charge interest

gdale6 — Fri, 24 Sep 2021 23:10:41 GMT

@Anonymous wrote:
I think @gdale6 is referring to this: Double-Cycle Billing Definition (investopedia.com)

Banned in 2009 so it would be surprising if it was still explicitly used

ETA: oh, looks like it WAS trailing interest, which is certainly legal

This too is crooked and I will be filing a complaint with the CFPB if they do not credit it back. In my 4+ decades of using cards I have never seen such a thing unless the card was predatory. I dont care if I lose the BoA cards due to the CFPB complaint. Any bank doing this gets my wrath. Now it its a cash advance of BT that is a different story.

Re: BoA using 2 statement cycles to charge interest

SoCalGardener — Fri, 24 Sep 2021 23:26:52 GMT

@gdale6 wrote:
@Anonymous wrote:
I think @gdale6 is referring to this: Double-Cycle Billing Definition (investopedia.com)

Banned in 2009 so it would be surprising if it was still explicitly used

ETA: oh, looks like it WAS trailing interest, which is certainly legal
This too is crooked and I will be filing a complaint with the CFPB if they do not credit it back. In my 4+ decades of using cards I have never seen such a thing unless the card was predatory. I dont care if I lose the BoA cards due to the CFPB complaint. Any bank doing this gets my wrath. Now it its a cash advance of BT that is a different story.

@Anonymous gave an excellent explanation of interest accruing after paying off a bill a few posts upthread; is there any chance that it applies in your situation? Just asking because I've been with BofA a long time and have never had anything like this happen.

Re: BoA using 2 statement cycles to charge interest

Anonymous — Fri, 24 Sep 2021 23:38:54 GMT

@gdale6 wrote:
@Anonymous wrote:
I think @gdale6 is referring to this: Double-Cycle Billing Definition (investopedia.com)

Banned in 2009 so it would be surprising if it was still explicitly used

ETA: oh, looks like it WAS trailing interest, which is certainly legal
This too is crooked and I will be filing a complaint with the CFPB if they do not credit it back. In my 4+ decades of using cards I have never seen such a thing unless the card was predatory. I dont care if I lose the BoA cards due to the CFPB complaint. Any bank doing this gets my wrath. Now it its a cash advance of BT that is a different story.

I really don't think it is crooked, and it is disclosed by many issuers (and I assume BoA). From Amex:

Trailing interest, also known as ‘Residual interest’, is the interest charged on your Credit Card balance that accumulates between your Billing Statement date and the date that you pay the bill in full.

Trailing interest only applies if you carry a balance on a Credit Card from month to month. Once the statement balance carried over from the previous month has been paid in full, the trailing interest will stop accumulating and will be applied on the following month’s statement.

To me, it makes perfect sense, and you will also see it in mortgages for example: the payoff amount isn't going to be the last statement balance as that is the amount you owed then, not by the time you pay. With credit cards, a little more complex because the expectation that if you PIF there won't be interest.

In contrast, double cycle really WAS crooked, potentially paying interest on purchases when you paid in full.

Re: BoA using 2 statement cycles to charge interest

FinStar — Fri, 24 Sep 2021 23:58:13 GMT

@Anonymous wrote:
@gdale6 wrote:
@Anonymous wrote:
I think @gdale6 is referring to this: Double-Cycle Billing Definition (investopedia.com)

Banned in 2009 so it would be surprising if it was still explicitly used

ETA: oh, looks like it WAS trailing interest, which is certainly legal
This too is crooked and I will be filing a complaint with the CFPB if they do not credit it back. In my 4+ decades of using cards I have never seen such a thing unless the card was predatory. I dont care if I lose the BoA cards due to the CFPB complaint. Any bank doing this gets my wrath. Now it its a cash advance of BT that is a different story.
I really don't think it is crooked, and it is disclosed by many issuers (and I assume BoA). From Amex:

Trailing interest, also known as ‘Residual interest’, is the interest charged on your Credit Card balance that accumulates between your Billing Statement date and the date that you pay the bill in full.

Trailing interest only applies if you carry a balance on a Credit Card from month to month. Once the statement balance carried over from the previous month has been paid in full, the trailing interest will stop accumulating and will be applied on the following month’s statement.

To me, it makes perfect sense, and you will also see it in mortgages for example: the payoff amount isn't going to be the last statement balance as that is the amount you owed then, not by the time you pay. With credit cards, a little more complex because the expectation that if you PIF there won't be interest.

In contrast, double cycle really WAS crooked, potentially paying interest on purchases when you paid in full.

Agree.

In the former days when this was a well-known practice, lenders like MBNA, BankOne/FirstUSA, Discover, Citibank, etc., definitely exploited such a feature to make as much $$$ even from the most unsuspecting customers or those who were used to PIF.

In the above BoA situation, fairly standard practice (in looking at most CCAs) among issuers like Chase, Citi, Discover, Huntingon, 5/3, TD Bank, BMO Harris...seems pretty much across the board 🤷‍♂️

Re: BoA using 2 statement cycles to charge interest

kdm31091 — Sat, 25 Sep 2021 00:13:53 GMT

Trailing interest is not illegal or crooked and in fact I believe all lenders pretty much do it. Most lenders use an "average daily balance" to calculate interest which means if you PIF your average is not instantly going to be zero, hence, interest may occur residiually if you had a balance for a length of time. At least, that's my understanding of it. You can certainly CFPB if you desire, but I don't see any wrongdoing here.

Re: BoA using 2 statement cycles to charge interest

NRB525 — Sat, 25 Sep 2021 14:06:51 GMT

@gdale6 wrote:
@Eyepinpools wrote:
Can you explain this?
Sure, I put a 2500 purchase on the card in May have been paying it down till i paid it completely off prior to the due date of my August statement and yet I was charged additional interest even though the purchase had been paid to zippo. Due date of the August statement was Sept 19 and it was totally paid off Sept 17 yet they charge me interest on my Sept Stmt.

This is completely normal interest for that time period ending Sept 17. CC interest is calculated daily. You had a balance on Sept 16 and there was no grace period so you got charged some interest, even if we only consider that day.

The only bank I know who would give you a free interest period in the month you paid to zero after charging interest in the prior month is Capital One. Every other major bank will charge interest to the last day, and most will also trigger a minimum interest charge on the day after that next statement because of the small amount of interest on the Sept 19 statement. So the faster you pay everything to zero now, the better off you will be. I once had to call USBank because they kept tacking on $1.50 minimum interest for 3 or 4 months, even though I kept jumping on the balance the day after statement.

CFPB not appropriate here. Rapid payment appropriate.

Re: BoA using 2 statement cycles to charge interest

gdale6 — Sat, 25 Sep 2021 14:43:50 GMT

Called in, interest charges refunded... I still say trailing interest is crooked and I will be writing my US contingent of Sens & Rep about it, this practice should be banned for purchases. Thanks all. Thread is now closed to further comments.