Stoozing, credit cards and minimum repayment

vb3d

Hi all,
I have been reading recenetly about stoozing, and I am confused a about the minimum repayment at the credit card.

I am currently looking at the Post Office credit card with 27months 0% and £1,200 limit.
So the plan as I understand it is to spend on the card, keep my salary in a saving account earning interest and pay the minimum on the card till the end of the 27th month where I pay the rest using the money on the account.
But the problem here is that minimum is the greatest of:
1 - 2.5% of the outstanding balance on your statement (minimum £5) OR
2 - The full balance (if less than £5) OR
3 - 1% of the outstanding balance plus interest, plus fees, plus any insurance premium

So if let's say I spent £1200, the minimum in this case will be one of
1 - £30
2 - N/A
3 - £12 + £20(interest)
Which will be the last one, where I pay interest and actually lose money.

What am I doing wrong?

grumbler

The interest is 0% during the first 27 months.
So, you pay 2.5%.

However:

• £1200 is "assumed" limit. Yours can be different.
• APR you see is "representative". Yours can be different.
• I don't understand how you calculated the interest as £20.
• I don't understand why you would "actually lose money" if you paid £12+£20.

And beware that only purchases made within 3 months qualify for full 27-months' 0%.

vb3d

grumbler wrote: »

The interest is 0% during the first 27 months.
So, you pay 2.5%.

However:

• £1200 is "assumed" limit. Yours can be different.
• APR you see is "representative". Yours can be different.
• I don't understand how you calculated the interest as £20.
• I don't understand why you would "actually lose money" if you paid £12+£20.

And beware that only purchases made within 3 months qualify for full 27-months' 0%.

Thanks for replying.

The £20 is approx 18.9% of £1200 devided by 12, I really should have put £18.90, which makes the total £30.90, which is still greater than the first option.
I lose money because as I understand it this £18.90 is interest and is not used to clear the debit.

In regards to the purchases in the first three months, excuse my ignorance as I am new to credit cards and never had one before, I though I can use it all through the 27month with no interest, is it the same as all other 0% purchase credit cards?

Regards

Nebulous2

There is no interest to pay if you are on 0%

The post office card seems to be beset with admin problems and takes a strong line on identifying you. Lots of stories on here about people having to get approved copies of documents and send them away.

To give my example.

I have a Nationwide credit card which is interest-free on purchases for 18 months. It also pays 0.5% interest. I've spent a lot on it as I had some bigger than usual purchases.

As long as I pay the monthly payment on time (it is paid by direct debit) I pay no interest. I meet the minimum payment from income each month and am saving more than I am spending on it in the bank in addition to that.

The sums of money are relatively small. I'm earning around £10 a month in interest and had just over £40 in cashback at the year end. Many people consider it too much effort for that, but by the end of the 18 months I'll have cleared over £200, so it certainly adds up.

grumbler

vb3d wrote: »

In regards to the purchases in the first three months, excuse my ignorance as I am new to credit cards and never had one before, I though I can use it all through the 27month with no interest,

I simply quoted what I saw on the website:

27 Month Purchase Terms & Conditions

• *A transaction must be made within 3 months of account opening to qualify for 0% for the first 27 months otherwise a purchase period of 0% for the first 16 months will apply

Whatever this means.
http://www.postoffice.co.uk/credit-card/matched

is it the same as all other 0% purchase credit cards?

No

LuSiVe

I read those Terms and Conditions differently: that if you didn't make any transactions in the first 3 months the interest free period would only be 16 months for any made after that?

grumbler

Well, unsurprisingly for shambolic PO, the Summary Box states "Purchases Introductory rate 0% for 16 months" and T&C keep silence about this.

However, you might be right as it says: "A transaction must be made...", although this can mean "any transaction qualifying for 27 months must be made within first 3 months".

Superscrooge

vb3d wrote: »

Hi all,
I have been reading recenetly about stoozing, and I am confused a about the minimum repayment at the credit card.

I am currently looking at the Post Office credit card with 27months 0% and £1,200 limit.
So the plan as I understand it is to spend on the card, keep my salary in a saving account earning interest and pay the minimum on the card till the end of the 27th month where I pay the rest using the money on the account.
But the problem here is that minimum is the greatest of:
1 - 2.5% of the outstanding balance on your statement (minimum £5) OR
2 - The full balance (if less than £5) OR
3 - 1% of the outstanding balance plus interest, plus fees, plus any insurance premium

So if let's say I spent £1200, the minimum in this case will be one of
1 - £30
2 - N/A
3 - £12 + £20(interest)
Which will be the last one, where I pay interest and actually lose money.

What am I doing wrong?

What I believe you are misunderstanding is the conditions you quote are the generic conditions that apply whether you are within the 27 months 0% period, or afterwards when you revert to the standard interest rate.

During the 0% period there is no interest to pay. So option 3 would only be approx £12 (it can vary slightly depending on statement date, how many days in the month and it will also go down as your balance reduces)

The figure that would apply during the 0% promotional period would be 2.5% of the outstanding balance and all your payment would be taken off your balance so you are not losing money

vb3d

grumbler wrote: »

I simply quoted what I saw on the website:
Whatever this means.
http://www.postoffice.co.uk/credit-card/matched
No

As LuSiVe said and as I understand it, it means I have to use the card within the first 3 months to be offered the 27months 0%, otherwise I will have the 16months 0% offer.

If the 0% rate is only for purchases made in the first 3 months, then what is the 16months 0% if you didn't use it in the first 3 months?

Another question, would they usually send bills/letters/statements to my address telling me what is my minimum repayment for that month?

i_was_taught_2b_cautious

Hi Grumbler


I have understood the promotion as you have to make a purchase in the 1st 3 months of opening the account, this can be any purchase even for £1. Once you do this you then change from 0% for 16 months to 0% at 27 months.


Not sure about only getting 0% for 27 months on transactions within the 1st 3 months....?


I could be wrong, but I have called PO several times to confirm this, and seems like a no brainer as long as I pay the 2.5 % every month of the full balance.

Nebulous2

vb3d wrote: »

Another question, would they usually send bills/letters/statements to my address telling me what is my minimum repayment for that month?

Credit cards provide monthly bills / statements. All of mine are registered for online statements only, so I get them through the website instead of by post. They normally send an email to let me know there is a statement available.

Statement dates vary a few days depending on length of month, weekends etc. A typical pattern would be sometime between the 9th and 14th of the month.

The statement says the due date, the total balance and the minimum payment. It also tells you how much interest to expect the following month.

The due date is generally 21days from the date the statement is produced. There are some variations in how they process payments so you often have to pay several days in advance to make sure it is credited to your account on time.

When stoozing I like direct debits for minimum payments. This makes sure your account is paid on time. Other people argue about this, with some people preferring manual payments and some saying you should always pay something, even £1, above the minimum.