BoA using 2 statement cycles to charge interest

[gdale6]

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@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

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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.

[SoCalGardener]

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@gdale6 wrote:

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@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

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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.

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@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.

[Anonymous]

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@gdale6 wrote:

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@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.

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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.

[FinStar]

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@Anonymous wrote:

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@gdale6 wrote:

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@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.

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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.

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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 🤷‍♂️

[kdm31091]

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. 

[NRB525]

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@gdale6 wrote:

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@Eyepinpools wrote:

Can you explain this? 

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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.

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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.  

[gdale6]

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.