Understanding the '0% for purchases' time period

martyp

Hi all,

I'm just a little unsure exactly what this term means and wondered if someone could explain.

Say for example I get a card with 3 months 0% interest on new purchases.
In month 1 I spend £200, month 2 I spend £300 and then don't use the card anymore after that 3 month period.
If I then pay off the minimum payment every month after that would that amount never incur interest or have I got that wrong?
Would the balance then start accruing interest charges on the balance after the 3 months are up regardless of how much is paid off per month?
Sorry this might be a daft question but I wasn't quite sure what the 0% over so many months on purchases meant exactly...

Ralphy101

you would need to pay the whole of the credit credit balance off within 3 months to stop incurring interest.

After 3 months you will start being charged interest.

so

1st month

---

>£200
2nd month

---

>£300

£500 would need to be paid off by the 3rd payment due date. If this isnt the case then you will get charged interest..

Also remember if during the 2 months you miss the min payment... then the 0% offer stops and goes back to normal % which will come into play after the third month.

martyp

Excellent, many thanks Ralphy101. Looks like I better get a longer interest free period...

Saucepot

No such thing as a daft question, but you have got it a little wrong.

0% for 3 months on purchases means that no interest will be charged for 3 months from the date the card is issued. After that date, any debt will accrue interest.

Points to be careful with are cards often have different interest periods for purchases and balance transfers and take payments off whichever has the short period. So be careful combining BT's & purchases on the same card.

Also be careful in the last month of a 0% deal. The interest free period can often expire on the day of a statement date. Always be sure of the date the 0% expires and seek to clear outstanding balances by that date.

The first statement ought to make it clear in regard to the date the 0% expires, but if it doesn't it is worth contacting them to ensure you are clear.

chattychappy

Yes, just to re-iterate. There will a date the interest free period ends. This won't necessarily fall on a "due by" date. So be sure to pay by the date the interest free period ends, regardless of when statement/due-by dates fall.

bengal-stripe

martyp wrote: »

If I then pay off the minimum payment every month after that would that amount never incur interest or have I got that wrong

Don't forget, you have to pay the minimum right from the first invoice.

martyp

Many thanks all, great advice.
My only experience with credit cards (since clearing debts from Uni) is with ones where I cleared the debt before the interest free period ended so wasn't sure what would have happened if I had gone past the interest free period.

thermalnermal_2

Hi I tried applying for a Sainsburys 0% on purchases for 12 months credit card. When the small print came it says that the 0% only applies if the balance is paid in full each month. I need the card as I have got a £500.00 bill to pay and I need to spread the repayments as haven't got cash just now. It looks like under these terms that I would have to pay the £500.00 in full at the next statement. This doesn't help me at all. I also looked at the Ts&Cs on the Barclaycard Platinum and it is the same. Looks like this is something to watch out for.

Unless anyone knows otherwise I won't be taking out one of these cards. I may have to go for a low interest rate one instead.

chattychappy

thermalnermal wrote: »

Hi I tried applying for a Sainsburys 0% on purchases for 12 months credit card. When the small print came it says that the 0% only applies if the balance is paid in full each month. I need the card as I have got a £500.00 bill to pay and I need to spread the repayments as haven't got cash just now. It looks like under these terms that I would have to pay the £500.00 in full at the next statement. This doesn't help me at all. I also looked at the Ts&Cs on the Barclaycard Platinum and it is the same. Looks like this is something to watch out for.

Unless anyone knows otherwise I won't be taking out one of these cards. I may have to go for a low interest rate one instead.

No don't worry.

If you pay in full each month, no interest is applied. If it isn't, then interest is applied from the date of transaction until paid for.

During the promotional period the interest rate is 0%. So if you pay in full each month, no interest is applied. If you part pay, then interest at the rate of 0% is applied - so still nothing.

When the promotional period ends, the interest rate changes to the standard rate. So if you pay in full each month, then no interest is applied. If you don't - then interest will be added.

You must always make the minimum payments on time. If you miss a payment during the promotional period, then the promotional rate is generally terminated immediately.

I have the Barclays Platinum card myself. No problems with just paying the minimum during the promo period. (I always pay just a little more than the minimum because it probably makes the credit report look better.)

dazza.mk

thermalnermal wrote: »

Hi I tried applying for a Sainsburys 0% on purchases for 12 months credit card. When the small print came it says that the 0% only applies if the balance is paid in full each month. I need the card as I have got a £500.00 bill to pay and I need to spread the repayments as haven't got cash just now. It looks like under these terms that I would have to pay the £500.00 in full at the next statement. This doesn't help me at all. I also looked at the Ts&Cs on the Barclaycard Platinum and it is the same. Looks like this is something to watch out for.

Unless anyone knows otherwise I won't be taking out one of these cards. I may have to go for a low interest rate one instead.

It sounds as if you are reading the Standard T&C's which apply when the 12 months 0% has finished.

What you want to look at would be similar to this:

http://www.sainsburysbank.co.uk/credit_cards/cca_credit_card_121212_std_skip.shtml

With a Sainsbury's Credit Card, Sainsbury's shoppers with a Nectar card* can enjoy 0% for 12 months on all shopping and balance transfers (3% BT fee applies) 15.9% APR typical variable

• 0% for the first 12 months on Sainsbury’s shopping
• 0% for the first 12 months on balance transfers (3% BT fee applies)
• 0% for the first 12 months on all other shopping

To keep your promotional rate you must pay at least the minimum payment by the due date and stay within your credit limit.

thermalnermal_2

Thanks for the advice, I'm always a skeptic and hate to get caught out. Looks like I'm OK with the Sainsbury's card as long as I pay off the balance within 12 months.