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. Credit Card Balance

    Credit card balance is the amount of charges, or lack thereof, ...
  2. Billing Cycle

    A billing cycle is the interval of time from the end of one billing, ...
  3. Past Due Balance Method

    A system for calculating interest charges based on any outstanding ...
  4. Recurring Billing

    Recurring billing is when a merchant automatically charges a ...
  5. Account Balance

    1. The amount of money in a financial repository, such as a checking ...
  6. Fair Credit Billing Act - FCBA

    The Fair Credit Billing Act (FCBA) is a 1974 federal law designed ...
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

    Procrastinator's Guide To Bill Payment

    Avoid punishing late fees and keep your credit score intact with these 10 tips.
  3. 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.
  4. Personal Finance

    Credit, Debit and Charge: Sizing Up The Cards in Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  5. Personal Finance

    Can Corporate Credit Cards Affect Your Credit?

    Corporate cards have a hidden downside. If the company fails to pay its bills, you could be liable for the amount and end up with a damaged credit rating.
  6. Personal Finance

    7 Tips For Closing A Credit Card

    Learn when it's a good idea to close a credit card, and how to make sure you do it right.
  7. Personal Finance

    How Credit Card Balance Transfers Work

    The pros and cons of credit card balance transfers.
  8. Personal Finance

    Which Credit Cards Are Best After Bankruptcy?

    Building back credit after bankruptcy generally starts with getting a secured credit card. Here's how to identify the best deals among the limited choices.
  9. Small Business

    How to Use Small Business Credit Cards

    A small business credit card can be a convenient way to increase your company's purchasing power, but must be carefully managed.
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 >>
Trading Center