Two-Cycle Average Daily Balance

[Anonymous]

Just today I was helping a co-worker search for a good credit card and I noticed there are several CCC out there that are computing your finance charges. I was suprised at this because I had not noticed any mention of the two-cycle average daily balance on here so I thought I would bring it up. Two major companies I noticed that do this are Discover and WaMu.

Here is a link to an article that explains why you should avoid this method of computing balances especially if you carry a balance:

http://www.bankrate.com/brm/news/cc/19980518.asp

I was pretty eager about applying for a Discover once my scores are high enough but now I am having second thoughts.

[Creditaddict]

Chase also uses 2 cycle billing i believe.

If you carry real high balance and then pay it off, you will be hit with follow up finance charges next month... kinda sucks... but doesn't really effect you if you don't carry high balances. or while your under 0%

[Anonymous]

---

Creditaddict wrote:

Chase also uses 2 cycle billing i believe.

If you carry real high balance and then pay it off, you will be hit with follow up finance charges next month... kinda sucks... but doesn't really effect you if you don't carry high balances. or while your under 0%

---

Yes, however I think these companies tend to lure folks in with their great balance transfer rates and once the introductory period is over, BAM! You're stuck in a possibly worse situation than before...assuming you still have a balance, that is.

Edit:typo

Message Edited by MeganML84 on 11-09-2007 02:10 PM

[haulingthescoreup]

Good post! Is it too much to hope that cards which do this actually call it "two-cycle billing" in their terms and conditions, or are there lots of euphemisms that we need to get familiar with?

[Anonymous]

---

MeganML84 wrote:

---

Creditaddict wrote:

Chase also uses 2 cycle billing i believe.

If you carry real high balance and then pay it off, you will be hit with follow up finance charges next month... kinda sucks... but doesn't really effect you if you don't carry high balances. or while your under 0%

---

Yes, however I think these companies tend to lure folks in with their great balance transfer rates and once the introductory period is over, BAM! You're stuck in a possibly worse situation than before...assuming you still have a balance, that is.

Edit:typo

Message Edited by MeganML84 on 11-09-2007 02:10 PM

---

I do know that Chase did use the Two-Cycle Average Daily Balance Method on some, but not all of their accounts at one time.  I have 2 Chase accounts, and they've only used the Average Daily Balance Method.  However, I did retrieve a "Notice of Change in Terms to Cardmember Agreement" that was issued this past September.  In this, they state

                          If your Agreement had the Two-Cycle Average Daily Balance method

                          we used to calculate finance charges on purchase balances, that method

                          has been replaced with the Average Daily Balance Method (including New

                          Transactions).  Under the new method, we compute interest on purchase

                          balances only for each current billing cycle.

I don't know if they have eliminated the Two-Cycle Average Daily Balance altogether, or if this "Change in Terms..." was only sent to particular cardmembers.  I received it with my bill, and as I've stated before, I never had that Two-Cycle method used on either of my accounts. 

Message Edited by psychic on 11-09-2007 03:15 PM

[Anonymous]

Check you Chase statements for changes to your terms and conditions.  They just changed mine to average daily from two-cycle.  I was informed that they are moving away from two-cycle on all products.

[haulingthescoreup]

Good for them! Consumer feedback might be making some changes here and there.

[Anonymous]

I have a couple that are two cycle- could'nt tell you which off the top of my head- but I know just like the mortg. industry having to testify on Capitol Hill so have the CC industries been. It is my opinion that is why we are recieving good news about most of them changing back to daily balance and getting rid of the two cycle.

I just saw something the other day about a CC exec being blasted for if a person even goes five dollars over limit they auto. rate jack to default rate.

One time I went a couple dollars over limit in a CC w/ a 300 CL and it cost me a CLI- I was furious- in the distant past when I worked in retail you used to NOT be able to go over a limit- if you were over limit you had to make a special call and the CSR would decide if they could still go ahead and charge- they would increase the limit just for one day and a certain amount for special circumstances.

Anway, on the 300 CC I called them and asked them to put in a code that absolutely will not let the card charge over limit, at times I have thought about doing it on all of them- but now that I have been on this board, I rarely EVER charge over 10% as I have enough CL's to be able to do it now.