What does the 0% on a credit card mean?

edwardmluk

So I've just successfully got the Natwest 18 month 0% card. Does this mean that whatever I buy on it, I only need to pay the minimum per month for that 0% period (not the full amount)?

Say I buy a laptop for £1000 (and for example let's pretend that's the only thing I buy with it), can I just pay off £100 per month for 10 months and that's all I'll get charged? No hidden costs.

Would there be any fees for not paying in full each month?

Is there no benefit in paying off a 0% card in full each month (other than ensuring I'm not going to rack up a bill at the end of the 0% period)?

Sorry if this is a bit "beginner-esque".
Thanks.

InsideInsurance

Your correct, you get no interest charges during the interest free period but must still make the minimum payment.

The only possible consideration for paying off anything more than the minimum payment is the impact it will have on your credit rating but if you arent intending to apply for any more credit in the near future this would probably be off set by the interest saved/ earned elsewhere

chattychappy

Yep. If you intend to pay just the minimum, it is probably worth paying £1 more than the minimum. This is because some credit files record if you are only paying the minimum. Paying as little as £1 more than the minimum each month prevents this.

Gromitt

Typically however, if you are on a promotional rate, then you can just pay the minimum by DD and no harm is done.

It's only once the promotional rate is over that a minimum payment may be regarded as 'bad' (as you will be paying interest by then)

joedenise

Pay the minimum payment and then anything extra into an instant access savings account (with a good interest rate, Post Office is pretty good at the moment) so that you can pay off the whole lot before the end of the promotional period.

Denise

jolfc

sorry to high jack a thread but can someone explain what the post office card repayment would be if i say transfered £1000 onto a 0% offer, it says



The monthly payment will be the greatest of:

• 2.5% of the outstanding balance on your statement (minimum £5) OR
• The full balance (if less than £5) OR
• 1% of the outstanding balance plus interest, plus fees, plus any insurance premium

many thanks

somethingcorporate

jolfc wrote: »

sorry to high jack a thread but can someone explain what the post office card repayment would be if i say transfered £1000 onto a 0% offer, it says



The monthly payment will be the greatest of:

• 2.5% of the outstanding balance on your statement (minimum £5) OR
• The full balance (if less than £5) OR
• 1% of the outstanding balance plus interest, plus fees, plus any insurance premium

many thanks

They will compare the 3 values highlighted above (each is self-explanatory) and you will pay the greatest of these.

Assuming it is £1k on 0% then you are most likely going to be paying back the 2.5% of outstanding balance which starts at £25 pm.

jolfc

somethingcorporate wrote: »

They will compare the 3 values highlighted above (each is self-explanatory) and you will pay the greatest of these.

Assuming it is £1k on 0% then you are most likely going to be paying back the 2.5% of outstanding balance which starts at £25 pm.

thank you for that, it is just natwest has no mention of 2.5% on their site when i was comparing the two cards just the 1%, so i got very confused by it all, so i am thinking it would be £10 a month with natwest.

somethingcorporate

It seems unlikely it would be that low but I have never had a Natwest CC. From my experience it tends to be 2-5% as the minimum payment.

If it does just say 1% then happy days.

jolfc

Each month, the greater of:

(i) interest, default charges, 1/12 of your annual fee (if any) and 1% of your remaining balance (excluding any remaining
part of the annual fee); or

(ii) £5.

We do not recommend that you only ever make your minimum payment


this is the info taken from the summary on natwest website.

all confusing to me.

somethingcorporate

It does look like 1% then!

Good stuff