One feature you need to avoid is one called two-cycle billing.
Two-cycle billing is how your credit card company calculates interest on your balance.
There are two ways: 1.
Two-cycle billing and 2.
Average Daily Balance.
The later is the best option for you the consumer.
In the past, Discover card was a company that used Two-Cycle Billing the most.
How does Two-Cycle Billing work? The credit company looks at your running balance over two cycle billing period meaning 60 days.
They charge interest on your balance over a 60 day period of time.
For example say you owe $1,000 on a credit card and pay $700 on month.
When they calculate your interest they still use the $1,000 as an amount to charge interest the next month.
Can effectively lower your Grace Period.
Average daily balance calculates your actual balance only 30 days or time between statements.
If you owed $1,000 and paid $700 the next month you would pay interest only on the $300 balance.
Today, more and more companies are going away from two-cycle billing.
However, you need to look carefully at the little box to see how interest in calculated.
The tip I can give you to hold onto any credit card applications you receive over the next month and review the little box describing the terms.
You want to look at the box which state Method of Computing the Balance for Purchases.
This box will show how interest is calculated.
It will state Average Daily Balance or Two-Cycle Billing.
There could be others, but these are the two most popular.
I always say increase your debt strength by increasing your finance knowledge.
The more information you possess the better your chances of finding good credit card offers.
You may also want to start keeping a file of offers just to compare any future offers since our memories are not always the best when it comes to specific details.
I don't know how many times I've met with someone and they are positive about rate on credit card until they pull out a recent statement.
It is always good to review your credit card statements to make sure your terms have not changed since you originally applied.
Two-cycle billing is how your credit card company calculates interest on your balance.
There are two ways: 1.
Two-cycle billing and 2.
Average Daily Balance.
The later is the best option for you the consumer.
In the past, Discover card was a company that used Two-Cycle Billing the most.
How does Two-Cycle Billing work? The credit company looks at your running balance over two cycle billing period meaning 60 days.
They charge interest on your balance over a 60 day period of time.
For example say you owe $1,000 on a credit card and pay $700 on month.
When they calculate your interest they still use the $1,000 as an amount to charge interest the next month.
Can effectively lower your Grace Period.
Average daily balance calculates your actual balance only 30 days or time between statements.
If you owed $1,000 and paid $700 the next month you would pay interest only on the $300 balance.
Today, more and more companies are going away from two-cycle billing.
However, you need to look carefully at the little box to see how interest in calculated.
The tip I can give you to hold onto any credit card applications you receive over the next month and review the little box describing the terms.
You want to look at the box which state Method of Computing the Balance for Purchases.
This box will show how interest is calculated.
It will state Average Daily Balance or Two-Cycle Billing.
There could be others, but these are the two most popular.
I always say increase your debt strength by increasing your finance knowledge.
The more information you possess the better your chances of finding good credit card offers.
You may also want to start keeping a file of offers just to compare any future offers since our memories are not always the best when it comes to specific details.
I don't know how many times I've met with someone and they are positive about rate on credit card until they pull out a recent statement.
It is always good to review your credit card statements to make sure your terms have not changed since you originally applied.
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