Don't understand terms of 0% interest card


I'm looking to get a 0% interest card to buy a computer and pay off the balance in the period the balance is interest-free (eg 13 months in the case of Tesco).

Yet, in the summary the cards all say things like:

"Maximum 51 days for purchases if you pay your balance in full and on time, and have paid the previous month's balance in full and on time. "

which to me sounds like you have to pay off the balance in 51 days. Or does it mean you have to pay your minimum payment in 51 days?

Sorry to sound thick... I'd really appreciate some clarification.



  • Tixy
    Tixy Posts: 31,455 Forumite
    You have to pay your minimum payment within 51 days.
    What is actually means is that you have to pay in 51days or you will be charged interest, its just that for the first 13months that interest is at 0%. Its after the 0% period has ended that this clause will become more relevant.

    Though it is very important to make sure that the minimum payment reaches them by the deadline shown on the statement every month, otherwise you will lose your 0% deal.
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  • total23

    So, if I pay at least the minumum payment in time each month and ensure the balance is totally cleared by the end of the 0% interest period, I'll have paid no interest on the amount I borrowed? Great if so.

    They don't word things in the most easily-understood fashion, do they?! Or perhaps it's a case of becoming familiar with the lingo.
  • total23
    Tixy wrote: »
    Its after the 0% period has ended that this clause will become more relevant.

    Ah, I get you, thanks again.
  • peterbaker
    peterbaker Posts: 3,083 Forumite
    edited 12 October 2010 at 7:09PM
    I strongly recommend that you set up a direct debit (DD) for the card company to take the minimum payment each month until further notice, then you do not have to worry about it being late each month.

    After the monthly minimum payment deadlines, the next most disastrous date to miss of course is the last day of 0% in 12 and a bit months' time if you haven't by then found the means to pay it all back in one hit.

    Oh, and just forget the 51 days - it means nothing to you. You do NOT have 51 days to pay. It is not worth your time me explaining here what I mean by that other than the obvious.

    What you absolutely MUST do is ensure that you know when to expect your next statement, and what the regular payment date is each month and do not miss any of them or you will quickly be in trouble with your plan because the 0% will be immediately withdrawn if you default.

    As I said, DD is the best way to obviate the risk and I recommend you call them tonight and ask them to set it up, AND ask them whether they can set it up in time to take the first minimum payment due.
  • total23

    I hear you about the DD. The only way I'd consider doing this would be to divide the total (one-off) spend by the number of months of the 0% interest period, and make that amount my monthly payment.

    Without wishing to seem overly cynical, for lenders to talk of 51 days at all sounds like a ploy to entice people to pay late and thus invalidate their 0% free opportunity.
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
    Name Dropper First Post First Anniversary
    total23 wrote: »
    Without wishing to seem overly cynical, for lenders to talk of 51 days at all sounds like a ploy to entice people to pay late and thus invalidate their 0% free opportunity.
    Nonsense! How can you pay late when the statement tells you when you have to pay by?

    And they don't talk of "51 days". They talk of "maximum 51 days" (from your own quote above) and "up to 51 days".

    Anything you buy on the day after your statement date will qualify for 51 days interest free. Anything you buy the day before statement date will get (51 - 31 =) 20 days interest free. All assuming you're outside the promotional period and you settle your bills in full each month.
  • peterbaker
    peterbaker Posts: 3,083 Forumite
    edited 13 October 2010 at 7:04PM
    YorkshireBoy, there is an informed audience for your insistence on detailing the 51 days, and the OP is not it on this occasion.

    I strongly suggest you Drop it, Sir ;)

    The OP needs practical advice - he is right to view credit card marketing talk and promotional balance transfers with the greatest scepticism.

    total23, if you think you won't be disciplined enough if you pay the minimum each month (thereby exploiting the 0% interest rate to the full) so that without that discipline you worry you may not otherwise save up the rest to pay in full at the end, then I understand your plan. I do believe that some but not all credit card companies give you three options for DD i.e.
    1. Pay the minimum (perhaps 5% of the outstanding balance as it reduces each month)
    2. Pay the whole debt each month in full
    3. Some other amount (your plan)
    It is option 3 which may not be on offer with some card companies.

    If you find that option 3 is not available when you ask, then possibly you could instead set up a Standing Order (STO) for your chosen amount instead, but you would need to be very very careful about not missing monthly pay dates if you use a Standing Order - you will need to take advice from your bank (not the card company) about the way it is set up in order to ensure payments are brought forward if the pay date falls on a weekend or bank holiday for example and at all times to allow for the time it takes for the monthly STO to be processed via the BACS system of whatever applies, which could be 4 working days I think depending on the bank and credit card involved. STOs can be messy in this regard when exact paydate adherence is essential. Bank advice has to be spot on to get it right, and you'd be lucky if it was.

    Instead perhaps (if you find that option 3 is not available), and really must consider broadly level payments for self-discipline purposes, I would actually avoid paying STO to the credit card if at all possible. There are too many pitfalls unless you are as informed as someone like YorkshireBoy. So I would still strongly recommend sticking to the minimum payment DD route to ensure you stay on track with the card pay dates. But then you would discipline yourself separately for the balance. So in addition to the DD, you might set up an separate STO for the balance of what you wish to pay monthly into a new savings account (if the CC deal you get is a 13 month one, then sounds like there is still time to start a 12 month Regular Monthly Saver account immediately and earn a bit of interest). Then you will use the matured regular savings balance to pay off the final balance on the Credit Card in 13 months time.

    Let's assume the amount you are going to spend on the computer is £1,200. If the minimum payment of the card is 5% i.e. first month £60 (it reduces to £35 by the 12th payment which is probably how many you will fit in the 12 month promotional period, rather than 13), then a regular saver with a £50 opening balance and a level £50 per month x 12 alongside it will just be enough to pay off the final balance and leave you enough for a fish and chip supper for two to celebrate :D

    I can email you a rough idea of such an overall plan (assuming a 13 month 0% deal) as an Excel spreadsheet if you like. (PM me).
  • londoner1998
    I am glad that total 23 raised this question- I have just got my forst ever creadit card and made the first purchase last night... and I am racking my brains trying to work out that that best way to pay is- I am disciplined with money and have no debts, but that doesn't mean I don't find some of the terms confusing...
    Thanks you for all that advice and specially to Peterbaker for explaining it in plain English...

    I am now trying to fidn out when the statement will turn up in the post and when my first payment is due... a journey of discovery this is!
  • Moglet
    Moglet Posts: 166 Forumite
    Remember you need to have cleared the balance by the time the final 0% statement is generated, not that you need to clear the balance by the due date.

    Hope that makes sense!
  • peterbaker
    peterbaker Posts: 3,083 Forumite
    edited 14 October 2010 at 12:52AM
    I have finally discovered how to get that spreadsheet across - it is not offered as gospel nor of course have I got any idea of the dates, or the exact terms of the Credit Card deals that the OP and others may actually be signing up for, but I trust it is useful to some. It is a possible example, that's all and if any regulars spot any glaring mistakes I will correct them. If anyone wants the original that includes some formulae behind the cells which calculates the reducing minimum payments etc. then PM your email address and I will send it to you.total23.jpg
    I left off the last line which should have read "Buy two Large Cod & Chips in Blackheath Village -£17" :money:
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