Posted by John Donovan :: June 7, 2007 @ 9:55 am

Double Cycle Billing “eliminates the interest-free period of a consumer who moves from non-revolving to revolving status. In other words, in cases where a cardholder, with no previous balance, fails to pay the entire balance of new purchases by the payment due date, issuers compute interest on the original balance that previously had been subject to the interest free period.”

Source: GAO Study

As you can see from the GAO chart below, using a double cycle billing method significantly increases interest income for issuers. In the case below, by a factor of 100!

Please click the example graphic below to see the full size image.

Roughly 1/3 of credit card issuers use this method of billing, and it clearly demonstrates that there is no such thing as a free lunch (or a free grace period).

So, here we are again talking about installment loans. Installment loans are repaid with a fixed number of periodic equal-sized payments. Nothing changes during the life of the loan, and at the end of the 36 month term your loan is completely paid.