How do 0% interest purchase cards works?

alevel18

Hi everyone,

Could you kindly explain if my example below is correct?

If I get a 0% interest (for 12 months) purchase credit card and then spend £1200 in the FIRST month can I then repay that (interest free over 12 months) i.e. £100 per month, OR do I HAVE to repay the full £1200 it within 30 days? If so, what makes it different from a normal credit card? As I understand on a normal card it (e.g. 18% APR), so long as you repay within the month, you won't get charged interest, so what's the difference?

chattychappy

The best way to think of it is as follows:

The general rule is you get up to 56 days interest free credit. This is because interest is not applied if you pay your statement balance in full. So if you make a purchase just after a statement date, it can take almost a month before you get the next statement (on which it appears). You may then get another 3 or 4 weeks to make the payment (cards differ a bit).

If you don't pay off your statement balance in full, interest is applied at the prevailing rate.

In the case of a 0% purchase card, the prevailing rate is 0%. So even if you don't pay off in full, no interest will appear.

(Remember if you fail to make the minimum payment by the due date then the deal is off. Also some transactions - eg gambling - don't count as purchases.)

So YES, you can do as you would wish. Spend £1200 and then pay £100 off per month. You would need to check the precise date that the deal ends and make sure you pay off in full by then. Typically it's 12 months from the date the account is opened.

rolls99

On a 0% card, you can spend whatever you like


The "golden" rules of course:


You always have to pay the minimum payment which will depend what you've spent


You can't bust your credit limit


You wouldn't normally be able to withdraw cash on it, gambling and so on.


In theory you could spend say £1000 and simply pay the minimum payment each month.


The one thing you MUST do is CLEAR it on the last (or before) "Promo" (interest free period) statement. Any balance kept longer than 12 months will attract interest.

Dobbibill

alevel18 wrote: »

Hi everyone,

Could you kindly explain if my example below is correct?

If I get a 0% interest (for 12 months) purchase credit card and then spend £1200 in the FIRST month can I then repay that (interest free over 12 months) i.e. £100 per month

This is correct

, OR do I HAVE to repay the full £1200 it within 30 days?

No, you don't.

If so, what makes it different from a normal credit card? As I understand on a normal card it (e.g. 18% APR), so long as you repay within the month, you won't get charged interest, so what's the difference?

The difference is time......you would normally get 0% for x months.
3, 6, 12 months etc.

alevel18

thanks everyone :-)

One more question. How is the 'balance' worked out?

If I borrow £1200 (0% interest over 12 months) what would the monthly balance be? Is it simply £1200 divided by 12?

Dobbibill

Your balance would be your total spend minus any payments made. They don't automatically divide it by the number of months that the offer is on. That's something you would have to do.
eg - spend £1200 in month 1 and pay £100 then your balance on the next statement would be £1100. whereas if you only paid £50 then your balance would be £1150.

Make sure you set up a DD for the minimum payment. You can always pay more if you want but failure to pay the minimum could result in the offer being withdrawn.

HTH

alevel18

thanks everyone, I really appreciate your quick replies :-)