Last month's statement for my Juniper card stated I had an outstanding balance of $434 and a minimum $20 payment due March 1, 2011. I paid the entire outstanding balance reflected on the statement (tax refund). This month I was surprised to receive a statement from Juniper informing me I had an outstanding balance of $3.79 from interest charges based on my last statement.
Is this a violation of the CARD Act?
From the White House CARD Act fact sheet:
Enforces Fair Interest Calculation: Credit card companies will be required to apply excess payments to the highest interest balance first, as consumers expect them to do. The act also ends the confusing and unfair practice by which issuers use the balance in a previous month to calculate interest charges on the current month, so called "double-cycle" billing.
I just want to be sure before I call the company.
Appreciate your thoughts on this!
If you carry a balance from month to month, then there is an "extra" month of interest on the statement following a pay off. The interest is calculated on the previous balance (usually the daily balance during the cycle) when the statement cuts. To avoid this, call and ask for the 10 day pay off. They will have to calculate the interest to give you a higher balance to pay off.
PS - it's not a violation of the credit card act.
It's something that ccc started doing back in the 90's to earn a little extra mula.
For a little further clarification, as I understand it, here is what happens. Let's say your statement closed on February 14. On that day, your balance was [some numbe less than $434]. They then calculated how much interest you owed, and came up with the total of $434. Your payment is due on March 1. But they are calculating how much you owe as of Feb. 14. That figure doesn't include the interest you owe for the additional time until they receive your payment. That's why you see a small charge on the next bill.
Double cycle billing is something completely different. It's a manner of calculating the balance against which they will assess interest by looking back to the previous month's balance. So if your balance in January had been $1000, they would have used that figure to inflate your average daily balance to calculate your interest.