We're aware that some users are experiencing technical issues which the team are working to resolve. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Interest Question

Options
If I have a credit card on 0% interest and then after 12 months it is 18.9% APR say.

Does that mean if I spend £20 in July - Then if I don't pay the whole £20 in August I will be charged:

1 - 18.9% on top of the £20
2 - 18.9% of £20 divided by 12
3 - £20

Comments

  • 18cc
    18cc Posts: 2,120 Forumite
    It means that whatever you spend in the first 12 months will not have any interest added. At the end of 12 months interest will be added on the total outstanding at that point. However, remember:

    1. you must make the minimum monthly payment each month and
    2. you must not go over your credit limit

    otherwise you risk losing the 0% deal.

    To answer your specific question - it you spend £20 in July then that is what you will owe. Your statement will show a balance of £20. If you make a minimum payment of say £5 when you get the statement, you will owe £15.
  • Jami74
    Jami74 Posts: 1,277 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    If I have a credit card on 0% interest and then after 12 months it is 18.9% APR say.

    Does that mean if I spend £20 in July - Then if I don't pay the whole £20 in August I will be charged:

    1 - 18.9% on top of the £20
    2 - 18.9% of £20 divided by 12
    3 - £20

    What 18cc said if you are still in the 0% interest period.

    I think how it works once you start paying interest is like this:

    You spend £20.
    £20 x 18.9% = £3.78 (interest per year on £20)
    £3.78 / 365 = £0.010356 (amount of interest charged per day on £20)
    £0.010356 x 31 (number of days in the month that you owe £20) = £0.329

    I might be wrong and if I am I hope someone corrects me because this is how I've been working out interest. But if I'm right then you'd still owe the original £20 plus 33p interest. I also think it depends where in the billing cycle you make your purchase because the number of days you owe might be more or less than 31.
    Debt Free: 01/01/2020
    Mortgage: 11/09/2024
  • molerat
    molerat Posts: 34,491 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If you do not pay off the full statement balance you will be charged 18.9% annual interest, or 18.95% / 365, on a daily basis on the outstanding amount. Purchases will be charged from the date of purchase as by not paying the full statement balance you lose the 56 days or whatever interest free period. On £20 that is about 1p per day.
  • it also depends on what type of interest free card you have.
    read your T&Cs, some 0% purchase cards you can buy interest free are for whole duration of the promotional period, so long as minimum payments are maintained, some only offer it for first few months for new purchases
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.7K Banking & Borrowing
  • 253K Reduce Debt & Boost Income
  • 453.4K Spending & Discounts
  • 243.7K Work, Benefits & Business
  • 598.4K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 256.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.