0% on Purchases, what's the small print?

jojo87

Hi,

I was hoping someone will be nice enough to explain a few things on Purchases Credit Cards because I'm still a little unsure.

I've been saving for my wedding, and I don't intend to borrow anything to cover the costs. However to help me out over the next few months, I was thinking of shopping on a new Credit Card with a 0% on purchases.

Now from what I've read up on these cards, ideal for big purchases and paying no interest for 18 months for example. (Pay off the purchase by the 18 months)

However I just want to stretch my income as much as possible over the next 6-12 months. So I intend to pay off a certain amount a month, but never in full and not worry about paying interest.

- Any good for just normal everyday shopping? Not any large expenses, but general shopping, fuel etc.

- Purchases - What applies as a purchase transaction? Anything in any store/online? Or are somethings exempt from this? (Not balance transfers or cash withdrawals ofc)

- Will I accrue any interest in the first 18 months on my purchases, if used as explained above?

- After 18 months of the interest free period, I intend to pay any balance in full. So I should never have paid any interest?

- After 18 month, if I don't pay it all off. As an example, I have a balance of £1000 remaining. Is interest worked out on this balance amount from the 19th month onwards?

Lastly, I've got a Rewards Credit Card (only CC I've ever owned). I've always paid it off in full, and have never accrued any interest for the life of the card. Something to just help build some good credit, and earn some benefits from cashbacks. I've no other debts, other than a student loan.

Will doing the above harm my credit rating, for a future loan or mortgage applications?

I appreciate anyone willing to walk me through it. I'm not really that savvy when it comes to CCs but don't wish to fall into debt I can't afford.

THANKS! :j

CLAPTON

you're about right

just make sure that you make the minimum payment each month on time without fail

and check exactly the end of the 0% free period ; it is often 18 month since opening and not the 19th monthly cycle

Gentoo365

Yeah,

But if you get to the end of the 18m period and have no means of paying it off then you may be in a pickle. As the interest rate will probably be high, and you do not know what interest rates will be like on other cards, whether 0% balance transfers will exist etc.

This is no doubt exactly how a lot of people get into debt.

be careful

jojo87

Gentoo365 wrote: »

Yeah,

But if you get to the end of the 18m period and have no means of paying it off then you may be in a pickle. As the interest rate will probably be high, and you do not know what interest rates will be like on other cards, whether 0% balance transfers will exist etc.

This is no doubt exactly how a lot of people get into debt.

be careful

Thanks for the replies.

I do intend to pay some off every month, so I stay within my limit and don't have a high balance to pay off by the end of 18 months. Or at least only have a small balance which I can manage.

redpete

jojo87 wrote: »

I've been saving for my wedding, and I don't intend to borrow anything to cover the costs. However to help me out over the next few months, I was thinking of shopping on a new Credit Card with a 0% on purchases.

Using a CC for spending and not paying the full balance every month is borrowing.

AFK_Matrix

I would personally only pay the minimum amount necessary for the cc and then put the extra money you want to pay towards the card in an account you can get interest on and accumulate it here . So basically you will be getting money via the interest instead of wasting it paying off the 0%cc. Then when the 18 months are up you can take the money you have saved and earned interest on and use it to help pay off the 0% cc.

jojo87

AFK_Matrix wrote: »

I would personally only pay the minimum amount necessary for the cc and then put the extra money you want to pay towards the card in an account you can get interest on and accumulate it here . So basically you will be getting money via the interest instead of wasting it paying off the 0%cc. Then when the 18 months are up you can take the money you have saved and earned interest on and use it to help pay off the 0% cc.

In concept, great idea. Though over 18 months if I only paid the minimum I'd reach the limit after a few months. So I'd have to pay some off to be able to make more purchases on it down the line.

AFK_Matrix

jojo87 wrote: »

In concept, great idea. Though over 18 months if I only paid the minimum I'd reach the limit after a few months. So I'd have to pay some off to be able to make more purchases on it down the line.

True but that will depend on your limit too, when I got a 0% card I got a 4k limit and I would hope you would try and not go to the limit. Usually these cards are mostly used for one off large purchases or that's how I see it. As if u want to use a credit card for daily stuff but don't want to pay interest then pay the card off in full every month and you'll not pay interest. If your worried about missing paying the cc then just setup a direct debit to pay the maximum statement amount each month. In 10 years I have never paid interest on a cc.

CLAPTON

jojo87 wrote: »

In concept, great idea. Though over 18 months if I only paid the minimum I'd reach the limit after a few months. So I'd have to pay some off to be able to make more purchases on it down the line.

makes no sense

what is the point of paying off more than the minimum and then borrowing it back again?

jojo87

CLAPTON wrote: »

makes no sense

what is the point of paying off more than the minimum and then borrowing it back again?

If my limit is £2000 for example. And on average monthly purchase spend is £400. Then after 5 months, I will no longer be able to make any purchases on the card.

The whole point for me is atm... stretching my income to cover my wedding expenses if it goes above my wedding pot that I've put aside.

So if my spend on my current CC is £400 a month, then I pay it off full every month.

However with the new CC, in the coming months, I can spend say the £400 and pay off £200 each month, then I can still continue to make purchases for an extra 5 months or so before I reach my limit. After 8-12 months, when all my wedding expenses are out the way, I plan to pay the balance off within 3-6 months. All whilst I've had to pay no penalties in interest, as I haven't paid the full amount off as I've been doing up until now.

I hope that made sense.

CLAPTON

jojo87 wrote: »

If my limit is £2000 for example. And on average monthly purchase spend is £400. Then after 5 months, I will no longer be able to make any purchases on the card.

The whole point for me is atm... stretching my income to cover my wedding expenses if it goes above my wedding pot that I've put aside.

So if my spend on my current CC is £400 a month, then I pay it off full every month.

However with the new CC, in the coming months, I can spend say the £400 and pay off £200 each month, then I can still continue to make purchases for an extra 5 months or so before I reach my limit. After 8-12 months, when all my wedding expenses are out the way, I plan to pay the balance off within 3-6 months. All whilst I've had to pay no penalties in interest, as I haven't paid the full amount off as I've been doing up until now.

I hope that made sense.

no it makes no sense at all

once you have used by the 2,000 limit, there is no difference using 200 cash to pay for a purchase
or use 200 cash to reduce your CC balance and then use the CC for the 200 purchase