DEFINITION of 'Double-Cycle Billing'

A method used by creditors, usually credit card companies, to calculate the amount of interest charged for a given billing period. Double-cycle billing takes into account not only the average daily balance of the current billing cycle, but also the average daily balance of the previous period. Double-cycle billing can add a significant amount of interest charges to customers whose average balance varies greatly from month to month.

Also referred to as "two-cycle average daily balance".

BREAKING DOWN 'Double-Cycle Billing'

Double-cycle billing has long been used by credit card companies to increase the amount of interest charged to customers. For the most part, many credit card customers are unaware of how this billing method affects their interest charges. The practice came to the general public's attention in 2006 during a United States Senate report on credit card practices.

RELATED TERMS
  1. Average Daily Balance Method

    A credit card accounting method where interest charges are based ...
  2. Previous Balance Method

    A credit card accounting method where interest charges are based ...
  3. Billing Statement

    A periodic report that credit card companies issue to credit ...
  4. Total Finance Charge

    The amount of money a consumer pays for borrowing money on a ...
  5. Descriptive Billing

    A type of credit card billing that includes the date, merchant's ...
  6. Billing Cycle

    The interval of time during which bills are prepared for goods ...
Related Articles
  1. Personal Finance

    Automating Your Bill Payments

    Automation can be a painless (and free) way to remove the stress of bill scheduling from your life - if you do it right.
  2. Personal Finance

    Everything You Need To Know About Credit Card Rates

    Understanding credit card rates will help you choose the right credit card, and avoid any unpleasant surprises.
  3. Personal Finance

    Procrastinator's Guide To Bill Payment

    Avoid punishing late fees and keep your credit score intact with these 10 tips.
  4. Personal Finance

    5 New Ways Credit Card Companies Are Wooing New Card Holders

    With new laws, credit card companies are forced to get creative to attract new customers.
  5. Personal Finance

    Breaking Down Credit Card Fine Print

    Those "perks" offered by credit card companies usually come with strings attached, and these are just a few of them.
  6. Personal Finance

    6 Major Credit Card Mistakes

    Avoid these pitfalls to keep your credit score healthy and your debt under control.
  7. Personal Finance

    How To Read Loan And Credit Card Agreements

    The devil is always in the details! Find out what you're signing yourself up for.
  8. Personal Finance

    8 Steps To An Organized Financial Life

    Disorganization makes planning difficult, and that can cost you big time.
RELATED FAQS
  1. How is interest charged on most lines of credit?

    Learn how most financial institutions calculate interest on lines of credit by using the average daily balance method and ... Read Answer >>
  2. Do balance transfers hurt your credit?

    The extent of the hit to your credit score depends on credit utilization. Read Answer >>
  3. Who uses bills of exchange?

    Find out who uses bills of exchange, why they are important in international trade and what happens when a bill is traded ... Read Answer >>
Trading Center