Originally published March 9 2005
Credit card two-cycle billing charges can add up quickly
by Mike Adams, the Health Ranger, NaturalNews Editor
Two-cycle billing is a practice credit card companies use to charge two months of finance charges when a balance is unexpectedly carried over from one month to the next. Bruce Hamlet of United Way Consumer Credit Counseling says that it's important to make sure you know the terms when you sign up for a credit card, in order to not get hit with hidden charges.
Ira Stoller usually pays off his credit card every month.
"I called, I complained, I yelled -- to no avail," said Stoller.
Ira's credit card company uses a practice called "two-cycle billing."
Instead of interest being charged on the balance for one month, it's based on the balance for the past two months.
For an example, let's say you've been paying your bills in full, but back in December you charged a $1,000 computer.
You couldn't make a payment in January, so you got a month's finance charge.
But when February came and you paid in full, you found out you were billed for two months of finance charges.
"For you, it may seem like a few dollars here and there but in the end it can add up to a lot of money, and certainly for the credit card companies, it adds up to really big bucks," she said.
Dozens of credit card companies practice two-cycle billing.
He said to pay attention to finance charges, because interest rates are high enough as it is.
"We've seen mortgage rates go down, we've seen the prime rate go down.
They've been there for at least the last 10 years," said Hamlet.
Stoller said he's learned his lesson with two-cycle billing.
He said he'll watch his spending more closely and he'll be paying off that balance every month.
"I can't stand the idea of renting money," he said.
Again, two-cycle billing is only a problem if you normally pay your balance in full but occasionally find yourself carrying a balance.
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