Zero percent on purchases

jpc1987

Hi,

I was hoping for some guidance on credit cards. I've never had one before, but was wondering what the deal was with 0% cards.

I can't find anything definitive on the web, but logic tells me that you don't pay any interest on purchases for the 0% period.

Is this correct? and what is the impact on your credit report if say, I reached the limit early on in the period, but then made no payment until the last day of the period and paid it off in full?

Thanks for any advice,
J

chattychappy

Yes that's broadly correct. But statements are generated monthly and will show the current balance, minimum payment and a due by date. The amount required is typically 2% to 5% of the outstanding balance. You must pay that by the due by date. If you fail to do so, the deal is terminated and interest will be applied.

So yes, 0% for the period quoted. But each month you will have to pay something back. Ideally you would pay the whole amount back before the end of the promotional period. The CCs hope that you don't - so when the 0% deal ends, you will still have a balance on which they can charge interest.

chattychappy

Oh just to answer your point directly, provided you run the account in accordance with the terms, your credit report will be fine. If you run the card up to the limit, then your report won't look so good because you might look a bit stressed. Also better to pay off a little more than just the minimum each month for the same reason.

If you've not had a CC before, it might be difficult to get a 0% card unless your own bank is offering one.