Does 0% credit card mean I could just pay minimum monthly balance?

dodomoney

I've been using credit cards for a few years and I've always paid the monthly bill in full and therefore never gone in to debt. I generally spend £300 between Amex and Mastercard a month. I've always ignored the % interest on them as Im confident I'll pay the balance off.

I recently spoke with Tesco for my Mastercard and they told me that I have an offer on my card since I opened the account last November, which is 0% interest for 21 months. She therefore advised me that as long as I pay the minimum (normally £25 a month) then theres no rush for me to pay the remaining balance.

Is this true that I could get away with paying the minimum for the remainder of this offer? I don't fully understand what 0% means. I've read a few pages on MSE but it doesn't go in to what 0% actually means, it kind of skips the real basics and starts advising people to pay as much as they can to not get in to debt yadda yadda. It'd be useful if "0% on purchases" means.

I could continue to pay the full balance every month. But I'd rather put the monthly £275 towards a santander 123 and then pay the full lot off when the offer expires. But I just want to know if its worth the hassle as I dont want to be hit with hidden charges on the credit card for not paying the full balance.

dodomoney

(I assume that it means no interest will be applied on the monthly balance and the monthly balance just carries over to next month. But some MSE pages kind of suggest otherwise but fail to elaborate on it.)

[Deleted User]

Correct. You won't be charged interest, so no need to pay in full each month.

Just pay it off before the end of the promo period.

pathtofreedom

Just make sure the offer you're looking at is 0% on purchases for the whole 20 months or whatever. Some are more geared to balance transfers - so moving money from a credit card which charges to interest to one that doesn't for a certain time. They might have a couple of months at the start for purchases but not for the whole term, so read the small print to make sure you're signing up for the type of 0% deal that works best for your plans.

dodomoney

thanks guys. Is it normal that she told me I still need to pay the minimum? I would have thought the 0% would apply to the entire balance, or nothing at all?

fromtheshires

Yes, you still need to pay the minimum balance off, even if it's 0%. It's no biggie though considering you can put the money you would have spent into a high interest current account and earn pennies whilst the bank is lending you their money.

MABLE

I have an MBNA card which is zero percent on purchases and BT's with a fee of 1.5 percent and both promotions finish at the same time in December 2017. For me definitely a win win situation.

Also min payment only 1 percent of the total balance each month.

chattychappy

Be clear about things.

You can get 0% on balance transfers (BT) or 0% on purchases, or both. In addition, it's standard for credit cards to offer "up to 56 days interest free" if paid in full.

So, if you're in the habit of paying your CC in full, you won't get interest anyway. If you take up a 0% purchase deal, then for the duration of the deal you only need to pay minimums. If you are carrying a balance at the end of the deal, then you will be charged interest from the expiry of the deal. If you miss a minimum, then the deal will end and you'll get interest from that point onwards - though some CCs will reinstate things if you ask nicely and it's a first offence.

In the case of balance transfers, if you have a balance elsewhere you can take up a 0% BT deal. You will likely pay a fee upfront. Again you only need to pay minimums. But because you're paying minimums, you are not clearing the account in full. Therefore you will get interest on any purchases you make on the same card. So usually it's best not to put purchases onto a card whilst there is a 0% BT deal running.

Finally, rather than just pay minimums, it's worth paying £1 more than the minimum. This is because credit reference agencies flag accounts where you're paying minimums only. It's doubtful this has a serious effect on your credit rating, but as £1 is enough to avoid this, that's what I do. (I pay manually so it's easy. If you use DDs, it's a bit more tricky.)