Trailing interest

Trailing interest (also known as residual or two-cycle interest) refers to the interest that accrues on a credit card balance after the statement is issued, but before the balance is repaid.

The monthly statement shows how much interest is owing at the time it is produced. The balance then continues to accrue interest until it is repaid. This additional interest is typically added to the following month's statement.

It has been criticised as an unfair practice, as it allow companies to collect interest on balances that the customer believes they have already paid off.^[1]

References

^ Mierzwinski, Edmund (17 April 2007). "Testimony of the U.S. Public Interest Research Group" (PDF). Legislative Hearing On HR 5244, the Credit Cardholders Bill of Rights: Before the Subcommittee On Financial Institutions and Consumer Credit Of the Financial Services Committee, U.S. House of Representatives Honorable Carolyn Maloney, Chair. United States House of Representatives. Archived from the original (pdf) on 2008-05-02. Retrieved 2008-01-27.

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[1] Mierzwinski, Edmund (17 April 2007). "Testimony of the U.S. Public Interest Research Group" (PDF). Legislative Hearing On HR 5244, the Credit Cardholders Bill of Rights: Before the Subcommittee On Financial Institutions and Consumer Credit Of the Financial Services Committee, U.S. House of Representatives Honorable Carolyn Maloney, Chair. United States House of Representatives. Archived from the original (pdf) on 2008-05-02. Retrieved 2008-01-27.

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