Interest On 0%? Huh?

[Deleted User]

Hi all

I just got this message from Capital One:

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I can confirm that the 0% interest rate on balance transfers expires on 25 September 2012. Thereafter, you'll be charged interest at the rate of 34.94% p.a. This means you'll be charged interest from your October statement.

Please note that we work out interest on balance transfers on a daily basis from the day that you transfer the balance. Because of this, it isn't possible to avoid paying interest on transferred balances. However, the earlier you pay your account, the less the interest will be charged.

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That doesn't make any sense to me; I thought that 0% offers meant 0% and that if the balance is paid off before the normal rate's applied, there's no interest. Isn't that the point? This message essentially says there's no 0% at all!

Have I completely misunderstood??

chattychappy

I think their cut'n'paste job went wrong!

The way I look at is this. Interest is calculated daily at the prevailing rate. In the case of purchases, it is not applied if the balance is paid in full by the due date.

A promotional deal is simply one where you get a special rate on certain transactions types for a period of time. Eg 0% for 12 months on BTs then it's back to the prevailing rate.

In your case, interest on the BT is being calculated from the date of transfer. It is being applied, but since the rate is 0% nothing appears. If you made purchases, then you'd get purchase interest at the purchase rate - unless you cleared the balance in full (which means the balance including the transfer balance). From 25Sep, the rate on the BT changes from 0% to 34.94%. If you've cleared it by then, then you won't see interest on the October statement.

[Deleted User]

Yes, I think they got a bit confused. We pay that interest that's backdated if the balance is still there after the offer's expired. Panicked for a second there!