please explain to me what the "two cycle average daily balance" method of computing is all about. I've heard that Discover card and some First USA cards utilize this method. I've also heard that if you carry a balance on a card that utilizes this method its tends to be more expensive.
Re: Two Cycle Avg Daily Balanc COPY AND PASTED... Author: Dani (1cust247.tnt1.warrenton.va.da.uu.net) Date: 04-10-01 13:09 Hi Aaron, I found this posted from Top on February 15 about two cycle billing: Two-Cycle Average Daily Balance, Including New Purchases. This balance is the sum of the average daily balances for two billing cycles. The first balance is for the current billing cycle, and is figured by adding the outstanding balance (including new purchases and deducting payments and credits) for each day in the billing cycle, and then dividing by the number of days in the billing cycle. The second balance is for the preceding cycle "Assume a consumer starts the first month with a zero balance and charges $1,000, of which the minimum amount due (listed on the statement) is paid. The next month, another $1,000 is charged and then the entire balance due is paid off. The same pattern is repeated three more times during the year. The stated interest rate on all cards is 19.8% APR. The yearly finance charge varies from $66.00 to $196.20. -------------------------------------------------------------------------------- Figure 2. Finance Charge Computation Methods* Average Daily Balance (excluding new purchases), finance charge is $ 66.00 Average Daily Balance (including new purchases) finance charge is $132.00 Two-Cycle Average Daily Balance (including new purchases) finance charge is $196.20 Two-Cycle Average Daily Balance (excluding new purchases) finance charge is $131.20 " Hope this helps. Dani
