I don't think i've understood credit cards

iguanapunk

I want a new Asus laptop (N55 i7 Core) which costs £749.99 and I couldn't find an interest free option from any websites so I have been considering the
popular Tesco Credit Card with 0% interest over 15 months.

My assumption was I could buy the laptop from TescoDirect with my new Tesco Credit Card for £749.99, and then just transfer via Direct Debit into the credit card account £49.99 a month (749.99 divided by 15) and incur no extra charges. I was just told that this is not how it works, that I must pay the £749.99 within the month of my purchase to avoid paying interest. If I pay £49.99 a month the interest rate will go from 0% to 16% after the first month.

I have never owned a credit card and I am an idiot so if you could help me I would be most grateful. Also, I will wait till the new year and hopefully there will be some sales on so I can get a cheaper deal on the laptop.

Scarpacci

Whoever told you that is wrong, but only when it comes to 0% cards. They're confusing the paying in full each month, which stops you paying (purchase) interest at any rate, to having a special promotion rate, which means you pay interest at that rate (0%) provided you keep within the cards conditions. Your original plan is, roughly, correct. You would have the length of the promotional rate to pay it off without interest. On a regular card, you would need to pay it off on the first statement to not pay interest.

However, as somebody who has not had a credit card before, you are extremely unlikely to get any 0% card. Especially a card from Tesco - who are a very picker lender. So, unfortunately you probably won't be able to pay for the laptop that way.

thesim

Sounds about right, I dont have a Tesco credit card, but alot of the cards you either have to pay it all of at once to get 0% or within a set time period (say 3 months) to get interest free.

I'm in the same boat, I'm start uni in January and need a laptop but I'm just going for a cheap one...as long as its works, connects to the internet and doesnt take all day to do something I'm ok.

Gromitt

Unless you have a proven credit history and not made any credit applications in the last 6 months, you are unlikely to succeed.

If you succeed, there is a high chance that they'll only lend you something like £400.

I remember applying, and also got that figure. I applied for the AA credit card on the same day and got accepted with a £4000 limit, so thats the card I use (with my FD CC as backup with a 3K limit, but thats mainly because they asked me for what I wanted, rather than telling me what I was going to get).

But 15 months is just that, you have 15 months to pay off the balance as long as you satisfy the minimum monthly repayments stated on your statement (which, for a £750 transaction, would be less than £50/month)

System

Firstly do you REALLY need to spend that much on a laptop?
Do you really need an i7 processor? Ive got an i3-based laptop and it is very slick. I paid under £300 for it. Or why dont you ask Santa Claus for one?;)

However its not a terrible idea to get a credit card - so long as you can afford to make repayments. It will build your credit rating if nothing else. If the card is 0% over 15 months, you can stick to your original plan.

Good luck.

iguanapunk

payvpac wrote: »

Firstly do you REALLY need to spend that much on a laptop?
Do you really need an i7 processor? Ive got an i3-based laptop and it is very slick. I paid under £300 for it. Or why dont you ask Santa Claus for one?;)

However its not a terrible idea to get a credit card - so long as you can afford to make repayments. It will build your credit rating if nothing else. If the card is 0% over 15 months, you can stick to your original plan.

Good luck.

My first laptop was a Dell and it cost me £1,500 and it has lasted me 9 years. Wonderful machine, but I WANT a new one and £750 isn't expenisve for a laptop that will hopefully last me for many years so I'd rather pay more money now for a more powerful CPU as I am a power user.

If the repayments are around £50 a month, that's not a problem, you can set it up so the money is transferred automatically right?

I would apply now to see if I get accepted but the laptop I want isn't is stock so I need to apply when it is, that way I have the 15 months to repay.

Thanks for all the input people. Keep it coming, and fill this empty mind with information.

andrew-the-cat

iguanapunk wrote: »

you can set it up so the money is transferred automatically right?

Yes, and it's a very good idea to do that

iguanapunk

andrew-the-cat wrote: »

Yes, and it's a very good idea to do that

I imagine you can do it with Barclays online banking quite easily?

Gromitt

iguanapunk wrote: »

If the repayments are around £50 a month, that's not a problem, you can set it up so the money is transferred automatically right?

Right, but don't fall victum to the payment periods. With a standing order setup, it is possible that your payment could fall outside of the payment window, so you could end up with 2 payments in one payment month and none in the next, causing you to lose your 0% offer, be charged a late payment fee, and also charged interest on the FULL amount of the laptop. So choose your SO date carefully.

Eg. if you make a payment a day before your statement is printed, then you must also pay the minimum balance on the statement by the due date, else boom! It all explodes.

Or, you could setup a DD for the minimum amount (more safer) and then setup an SO to make additional payments.

2sides2everystory

OP you worry me a bit ! (I am guessing my son is about your age).

I am a "power user" - I have a Medion laptop that cost £450 originally 4 years ago I think. My son bought his Dell when in his final O level year. About £700! I am the earner. He isn't yet somehow he's the one who rationalises that he needs a laptop that costs 50% more than mine! Happily it has only collected a few dents and when the hard drive packed up outside guarantee we upgraded it easily ourselves for £50. The new hard disk off ebay was better than the original and as a result he fell in love with his laptop afresh and if he drops it again the gravity sensor will hopefully do its stuff!

My #2 son bought his just before he started A levels. A Vaio - £700! So far so good.

You want to spend £750! Unless you are very careful you do know no laptop will last more than about 4 or 5 years problem free due to the lack of durability in any of them? Yeah yeah ... OK I see you are very careful - 9 years on a Dell costing £1,500.

So now you plan to pay £50 a month? And that doesn't even cover the cost of internet? That's quite some to pay for your computing. OK I guess you've budgeted for it, right?

And now you want a credit card to make it work ? Yoiks :eek:

OK - first - remember credit cards are dangerous They bite !

Second, never forget they are just a means to an end - nothing more. In your case the end is to get a 12 month interest free loan and by simply holding the card for a period and making regular payments tou might also get yourself some kind of credit rating. But don't be tempted to use the card for any extra credit until you've made it work this time.

You need to check the promotional interest terms very carefully. What bad things can happen to lose you that 0%? For sure if you fail to pay on time - very bad. Also a card provider trick that used to pervade the market was to give you 0% and if you used the card for anything else, the low interest credit got paid first from your monthly payments and the extra stuff you'd bought caught the full purchase interest rate. Very much defeats the original object, that. I think most cards have stopped it now. But check carefully. Better still as I say, if you get the sort of card you want, don't go using it for anything else until you understand perfectly its effect.

Plus points for using a card? Consumer Credit Act 1974 Section 75 in case things go wrong.

OK - back to Rule number 1 - never pay late! Let the card company take the money by direct debit. Then you know that you have always paid on time. Don't kid yourself that setting up a standing order will be just as good. Hear what Gromitt says. It won't. You'll probably slip up over a bank holiday weekend or something dumb like that and they will tell you you've paid a day late and lost your promotional 0%. If your card company doesn't allow you to choose a fixed payment by direct debit then choose to pay the minimum by direct debit with them and make up the balance of the £50pm with a standing order arranged with your bank.

Rule number 2 - don't pay late! Yes, you still can end up doing that if you max out your bank account and the DD fails so - always leave a buffer in your bank account. Don't take it to the wire because that's where bad things start happening to all your regular payments. You do not want grief like that. So - budget and buffer!

Otherwise, good luck!

iguanapunk

2sides2everystory wrote: »

OP you worry me a bit ! (I am guessing my son is about your age).

I am a "power user" - I have a Medion laptop that cost £450 originally 4 years ago I think. My son bought his Dell when in his final O level year. About £700! I am the earner. He isn't yet somehow he's the one who rationalises that he needs a laptop that costs 50% more than mine! Happily it has only collected a few dents and when the hard drive packed up outside guarantee we upgraded it easily ourselves for £50. The new hard disk off ebay was better than the original and as a result he fell in love with his laptop afresh and if he drops it again the gravity sensor will hopefully do its stuff!

My #2 son bought his just before he started A levels. A Vaio - £700! So far so good.

You want to spend £750! Unless you are very careful you do know no laptop will last more than about 4 or 5 years problem free due to the lack of durability in any of them? Yeah yeah ... OK I see you are very careful - 9 years on a Dell costing £1,500.

So now you plan to pay £50 a month? And that doesn't even cover the cost of internet? That's quite some to pay for your computing. OK I guess you've budgeted for it, right?

And now you want a credit card to make it work ? Yoiks :eek:

OK - first - remember credit cards are dangerous They bite !

Second, never forget they are just a means to an end - nothing more. In your case the end is to get a 12 month interest free loan and by simply holding the card for a period and making regular payments tou might also get yourself some kind of credit rating. But don't be tempted to use the card for any extra credit until you've made it work this time.

You need to check the promotional interest terms very carefully. What bad things can happen to lose you that 0%? For sure if you fail to pay on time - very bad. Also a card provider trick that used to pervade the market was to give you 0% and if you used the card for anything else, the low interest credit got paid first from your monthly payments and the extra stuff you'd bought caught the full purchase interest rate. Very much defeats the original object, that. I think most cards have stopped it now. But check carefully. Better still as I say, if you get the sort of card you want, don't go using it for anything else until you understand perfectly its effect.

Plus points for using a card? Consumer Credit Act 1974 Section 75 in case things go wrong.

OK - back to Rule number 1 - never pay late! Let the card company take the money by direct debit. Then you know that you have always paid on time. Don't kid yourself that setting up a standing order will be just as good. Hear what Gromitt says. It won't. You'll probably slip up over a bank holiday weekend or something dumb like that and they will tell you you've paid a day late and lost your promotional 20%. If your card company doesn't allow you to choose a fixed payment by direct debit then choose to pay the minimum by direct debit with them and make up the balance of the £50pm with a standing order arranged with your bank.

Rule number 2 - don't pay late! Yes, you still can end up doing that if you max out your bank account and the DD fails so - always leave a buffer in your bank account. Don't take it to the wire because that's where bad things start happening to all your regular payments. You do not want grief like that. So - budget and buffer!

Otherwise, good luck!

Don't worry dad, I am reasonably sensible with money and I think if I can do this right with the advice in this thread (a Direct Debit where the credit card automatically takes from my account) I can end up with a nice laptop and not be in massive debt. Maybe I will consider an i5 processor...

I don't quite understand your remark on Internet costs.