0% on Purchases Question

BuilderBob_2

I have a Tesco Credit card and the balance is currently 0. Now I have 13 months interest free on purchases. I am going to pay someone £2,500 but in the 10 months or so Ill have interest free, I am not going to be able to pay that off.
What happens when the deal runs out? Will I end up worse off than if I just put it on a regular card which charges me interest every month?

Lets say I pay off £500 of it in 10 months, and the balance is £2000 and my 0% interest has run out. What am I in store for.

Thanks

CLAPTON

you will be charged the 'standard' purchase APR for that card for whatever balance you have left.

so in your example you will start paying interest on 2000 at presumably quite a high rate

can you avoid making the purchase all together as repaying only 500 in 10 months is a very low repayment rate and so it would appear you can't really afford it.

BuilderBob_2

I can't avoid it no.
I'd be better off just paying it with a credit card with a steady interest rate would I?

Or will it just end up the same, just that when the higher interest comes, the credit card company will be re-couping the previous months of no profit?

Card is at 16.9%apr at normal times. Am I making sense?

0% deals - are they only good if you can clear the balance in that free period? I am definately not going to be able to clear the balance in 10 months so whats the best option? Want the lowest interest over the 18 months or so it will take me to clear it to zero.

options are a) use my regular card at 16.9%apr to pay it and start paying interest at that rate immediately.

Or b) Pay with the Tesco card with 0% interest for 10 months then the higher rate there after.

Please help answer these someone.

CLAPTON

if you compare two cards
'A' has a 0% period and then goes to 16.9%
and
'B' is at 16.9% all the time

then clearly 'A' the first card will charge less interest overall as the first 9 months have no interest

MFWannabe

BuilderBob wrote: »

I can't avoid it no.
I'd be better off just paying it with a credit card with a steady interest rate would I?

Or will it just end up the same, just that when the higher interest comes, the credit card company will be re-couping the previous months of no profit?

Card is at 16.9%apr at normal times. Am I making sense?

0% deals - are they only good if you can clear the balance in that free period? I am definately not going to be able to clear the balance in 10 months so whats the best option? Want the lowest interest over the 18 months or so it will take me to clear it to zero.

options are a) use my regular card at 16.9%apr to pay it and start paying interest at that rate immediately.

Or b) Pay with the Tesco card with 0% interest for 10 months then the higher rate there after.

Please help answer these someone.

If you really need to do this then go with option b. You could always look to see if you can then change the balance to another 0% card just before the 10 months finishes on the Tesco card. If not then you may be able to get it on a life of balance card which would be cheaper then paying 16.9%

BuilderBob_2

OK thanks guys.
Obviously it seems that the 10 months interest free would be the cheaper option, but I know nothing about how these 0% periods work. To exagerate I wasn't sure if the interest rate shoots up to 25% if its not cleared in that period.

So if after the 10 months interest free I have £2000 on the card still, I just start paying as normal at the cards regular standard rate?
They dont stick the 10 months that were free back on?

fozmcfc

They don't stick it back on no.

BUT......if your credit rating is good near the end of the interest free period, nothing to stop you applying for a 0% on balance transfers card and ending up with 0% on the £2000 left for maybe another year.

The only extra cost would be the 3% or 4% fee charged for transferring the balance.

EDIT.......http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards article regarding balance transfers

BuilderBob_2

just rang Tesco.

Example:

If I bought something for £10,000 then at end of interest free period I have £5000 remaining. I am charged the 16.9 %apr rate from the period I first put it on there, to the end of the deal, but only charged on the £5000 remaining.

Answered my question.

Curt.

Of course you could ring up your regular card, (option A above) at the end of the 13 months, see if they will give you a BT offer (usually incurring a small fee) for another 0% offer for some months on that debt. Or apply for a 0% BT card in general to transfer the balance like mentionned above.

Btw its 0% for either 10 or 13, not both as you have conflictedly stated above.

(Presumably its 13, which is the current Tesco offer.)

YorkshireBoy

BuilderBob wrote: »

just rang Tesco.

Example:

If I bought something for £10,000 then at end of interest free period I have £5000 remaining. I am charged the 16.9 %apr rate from the period I first put it on there, to the end of the deal, but only charged on the £5000 remaining.

Answered my question.

You were either misinformed or, more likely, misunderstood what was being said.

Interest is not backdated. From the day your 0% ends you will start to accrue interest on the remaining balance at the rate of (£5,000 x 15.73% / 365 £2.15 per day.

Answered my question

Hmmm...don't think so!