How does the 0% actually work on credit cards?

rash.m2k

Ok so I've had a cashback credit card since I was at Uni, but never actually needed to borrow money, I only did it for the cashback, perks and buyer protection.

Now I actually want to use the 0% on a credit card as I want to buy a car (~£5k).

I've gone for the M&S CC and 19 mths in plenty for me to pay off the 5k.

But I don't understand the monthly payments/minimum payment. Even though it says 0% interest for 19 months do I still need to make a 'minimum payment' each month?

I guess the real question I'm trying to get at is what do I need to do to ensure I don't pay any interest?

Daerve

rash.m2k wrote: »

Ok so I've had a cashback credit card since I was at Uni, but never actually needed to borrow money, I only did it for the cashback, perks and buyer protection.

Now I actually want to use the 0% on a credit card as I want to buy a car (~£5k).

I've gone for the M&S CC and 19 mths in plenty for me to pay off the 5k.

But I don't understand the monthly payments/minimum payment. Even though it says 0% interest for 19 months do I still need to make a 'minimum payment' each month?

I guess the real question I'm trying to get at is what do I need to do to ensure I don't pay any interest?

Minimum payment is just that, the minimum you must pay every month.

If you want to pay zero interest just work out 18 months worth of 0% payments for whatever you put on the card and pay that instead of the minimum and cut the card up just after you've bought the car.

grumbler

rash.m2k wrote: »

I guess the real question I'm trying to get at is what do I need to do to ensure I don't pay any interest?

Keep making minimum payments on time for 18 months (set a DD up), then pay the balance off at the end.

SuzieSue

Remember most car dealers will charge a fee if you pay by credit card (see the following thread:

https://forums.moneysavingexpert.com/discussion/5221399)

macman

Min payment is 2.5% of the balance, so if you owe £5K, the initial minimum monthly payment will be £125.

rash.m2k

Min payment is fine, it'll be DD anyway. I knew they charged to pay by CC hadn't realised that it could be between £75 and £150 on £5k.

Kittycat1981

If you was paying £5000 over 19 months the payments would be £263.16 per month to completely pay it off.

I would pay the minimum payment of £125 +£1 a month onto the card and pay £136.16p into a higher interest current account or savings accoun to earn a little bit of extra interest (which can go towards the cost of the credit card fee), then on the 19th month transfer over the outstanding balance of £2587.04 + £125+£1 minimum payment.

This is excluding the fee of between £75-£150

[Deleted User]

rash.m2k wrote: »

Ok so I've had a cashback credit card since I was at Uni, but never actually needed to borrow money, I only did it for the cashback, perks and buyer protection.

Now I actually want to use the 0% on a credit card as I want to buy a car (~£5k).

I've gone for the M&S CC and 19 mths in plenty for me to pay off the 5k.

But I don't understand the monthly payments/minimum payment. Even though it says 0% interest for 19 months do I still need to make a 'minimum payment' each month?

I guess the real question I'm trying to get at is what do I need to do to ensure I don't pay any interest?

In order to ensure you do not incur any interest, you need to pay off the amount in full before the expiration of the interest free period, and keep to the terms of the credit agreement, which includes making the minimum monthly payments.

The minimum monthly payments will be stated on your monthly statements, but be aware that only paying the minimmum monthly payments will no way come close to paying off the debt within the interest free period.

Also be careful if you plan to use the card again during this period. The interest free period is usually much longer than the offer period that you can use the card to make interest free purchases, so later purchases (after the offer period) would incur interest as you are not paying the balance off in full every month.

rash.m2k

Ah thats a sneaky one if say all purchases within 90 days are interest free.

Also whats the difference between '19 months' shopping with no interest to pay' and 'Up to 55 days' interest free credit':

http://bank.marksandspencer.com/banking/credit-card/overview/#further-details

David301

rash.m2k wrote: »

Ah thats a sneaky one if say all purchases within 90 days are interest free.

Also whats the difference between '19 months' shopping with no interest to pay' and 'Up to 55 days' interest free credit':

http://bank.marksandspencer.com/banking/credit-card/overview/#further-details

19 months interest free is no interested on the outstanding card balance for 19 months

up to 55 days depends on when you purchased an item and when they make your monthly statement and your bill payment day. If buy something on the first day of your new period your statement is made a month later and you have to pay it on whichever date after that. If you pay in full there is no interest on that purchase

Candyapple

rash.m2k wrote: »

Ah thats a sneaky one if say all purchases within 90 days are interest free.

Also whats the difference between '19 months' shopping with no interest to pay' and 'Up to 55 days' interest free credit':

http://bank.marksandspencer.com/banking/credit-card/overview/#further-details

You're reading it wrong. The bit highlighted refers to balance transfers only.

The M&S card offers 19 months at 0% on purchases, this can be anything you buy within those 19 months and it will remain interest free until the end of that period. So even if you bought something in month 16, it would still remain interest free for another 3 months as that would be the end of the 19 months. The idea is you make your big purchase(s) at the start of receiving the card in order to maximise the benefit of the full 19 month term.

The card also offers balance transfers at 0% for 15 months, however you only have 90 days from the card being open to do this. After this, if you haven't taken it up, the balance transfer offer expires.