What happens when interest-free period ends

chrisf

Good morning Money Savers
Apologies for a fairly basic question on credit cards, but I have my first one so am not as much of an expert as I could be - and the literature from my bank doesn't help much...

Anyway, I took out a credit card with a 16-month interest-free period. That period is about to expire.
I have a balance of £1,600 which I am steadily paying off (I no longer use the card for purchases).
So, will I get charged interest on the balance of £1,600? Common sense leads me to believe I will.
If so, would it make sense to switch to a new credit card - I am just trying to pay the debt off, I don't need a new card for spends.

Sorry for my sheer ignorance!

MrsKrepsly

As far as I know, you will be charged interest on whatever is remaining on the card when the 0% period finishes.

You could try a 0% interest transfer card but they do charge a percentage so you'd need to work out whether paying 16% interest on your balance would be cheaper than the transfer fee.

CLAPTON

yes, you now start payinmg interest on the balance

so if the APR of your card is say 20% APR you will pay approximately

1,600 x 20%/12 per month i.e. about £27 per month interest

the minimum payment of course will be more than this.


it will probably be cheaper to get a 0% BT card and do a transfer but it depends upon the details of the cards and how much you are paying off each month.

sfax

It depends how long you take to pay it off. Find out the monthly interest charge and weigh it up against a handling fee for transferring the balance and paying it off on a BT card. The longer you take to pay it off, the more attractive a BT becomes

thenudeone

But just in case you were worried, the interest isn't backdated. i.e. there won't be 16 months' worth of interest charged if it isn't paid off. You'll only get charged interest from the end of the 16-month period until you actually pay it off.

chrisf

Great advice - thanks all.
You should all be employed to copywrite the credit card leaflets!