Help with Barclays Credit Card for beginner 1 September 2022 at 6:58PM edited 1 September 2022 at 6:59PM in Credit cards 12 replies 501 views

MFR123

Hi, I hope you're well

I just wanted to clarify something, is the 0% interest exactly what it says on the tin?

Scenario:

I want to purchase an Item for about £700. Now I was going to get this outright to save myself the headache but I then thought it would be good to spread the cost if I could. However, I really don't like paying interest, AT ALL PERIOD. 
So, ideally, if I can, I'd like a creditor to buy it for me, then I could pay them back in small installments every month. That's what crossed my mind.

Then I heard of Barclays Credit Card. They're offering 0% interest for 22 or something months.

Now, the last time I used credit to buy something was 3+ years ago, for something of a similar amount, but it was PayPal credit then, and I simply paid a fixed amount each month and by the end of 12 months, I had paid off the actual price of the thing I bought, and not a penny more. 
Sadly, PayPal only offers interest free purchases for 4 months now so I don't want to use them, if I can help it.

If I use the Barclays credit card to pay for this, will it work just like when I bought the previous Item with Paypal? 
They will buy it for me, then I pay them back the price of the item divided by the amount of time the 0% interest goes on for (which in this case would be 22 months or so), each month?

So if I buy something for £700, and pay £32 every month, for 21 months, I will have paid £672, and so the final month, I will pay £28 and this will clear my debt.

Is this correct?
Or is the interest added on some other way?

P.S. I have never used an actual credit card for anything before, but I have used Credit through PayPal, and that was my first time with that and I kind of liked the idea of spreading the cost, without interest of course.

Many Thanks

grumbler

MFR123 said:

Then I heard of Barclays Credit Card. They're offering 0% interest for 22 or something months.
...
If I use the Barclays credit card to pay for this, will it work just like when I bought the previous Item with Paypal? 

Yes, if 0% is on purchases. Some cards offer 0% on balance transfers.

They will buy it for me, then I pay them back the price of the item divided by the amount of time the 0% interest goes on for (which in this case would be 22 months or so), each month?

So if I buy something for £700, and pay £32 every month, for 21 months, I will have paid £672, and so the final month, I will pay £28 and this will clear my debt.

Is this correct?

Yes, if the minimum payment is no bigger than 1/22 of the original balance.

Or is the interest added on some other way?

No.

eskbanker

MFR123 said:

I have never used an actual credit card for anything before

....in which case you may not be eligible for a 0% card and the dialogue above would be moot.  Check out your prospects at:

https://www.moneysavingexpert.com/eligibility/credit-cards/search/?goal=CC_PURCHASE

MrFrugalFever

Barclaycard do an eligibility check ‘soft search’ and will tell you if you’ve been provisionally approved and what for, I.e they might approve you but for 12 months 0% purchase and a higher APR afterwards instead based on your limited credit history.

Alex9384

It's not only Barclaycard. There are more banks offering credit cards with introductory 0% purchase offer.

I personally would try an eligibility checker for Halifax/Lloyds first, since they also show you what your estimated credit limit will be before you proceed to full application.

Ebe_Scrooge

As above, assuming you can get accepted for a 0% promotional deal (not as easy these days as it once was, even less so if you have little credit history for them to analyse), then there's no interest to pay as long as it's used correctly.

MFR123 said:

They will buy it for me, then I pay them back the price of the item divided by the amount of time the 0% interest goes on for (which in this case would be 22 months or so), each month?

So if I buy something for £700, and pay £32 every month, for 21 months, I will have paid £672, and so the final month, I will pay £28 and this will clear my debt.

That's about the size of it.  Note that you don't have to pay [purchase price / 22] every month.  You can if you wish just pay the minimum payment every month (which will be detailed on you statement).  At the same time, put money aside each month into a savings account, then use that to pay off the remaining full balance just before the promotional deal expires.  This used to be a good strategy when you could earn some decent interest on your savings - to be honest, these days it's hardly worth the bother (although, who knows, what with the way interest rates are going at the moment?).

Anyhow, the bottom line is: (1) you must make at least the minimum payment each month, otherwise the promotional rate will be immediately withdrawn, and (2) one way or another you must plan to clear the full balance by the time the promotional rate expires.

MFR123

Thank all for your helpful feedback!

The place I wanted to get the item from isn't accepting PayPal Credit OR Barclays credit as apparently my purchase for the item isn't "eligible" even though it's like £700

I'm thinking to apply for capital one credit card as they give 0% interest for 6 months - 

Questions:

Q1) Is this still the same as if I had used PayPal Credit?

Q2-A) Also, can someone clarify what the following lines mean on the terms and conditions for capital one:

It says: 

"With your credit card, you'll get up to 56 days interest free on purchases, providing you pay off your balance in full each month"

So I THINK this means 1 of 2 things:

One:
They will give me a set amount I will have to pay back i.e. the minimum amount each month, and so long as I pay that in full, it will be 0% interest for 6 months? So if the minimum is £30, I have to pay them £30 minimum back every month IN FULL.
But since I want to pay £700 in 6 months, I'll be paying them 116.60 every month for 6 months and then I'm done, as after this they will charge interest for any balance that remains for me to pay off.

OR

Two: 
They expect me to pay them the £700 in one go by the end of the month - In which case it's pointless to even apply here

Which is it?

Q2-B) Also, can someone clarify what the next sentence means?

"However, we'll always charge interest on balance / money transfers and cash withdrawal transactions from the date you make the transaction, unless you have a 0% introductory/promotional rate."

I THINK this means that unless you're a new customer (which I am), they will charge interest on any balance you may transfer onto the new credit card or any cash you may withdraw (which I won't be) - Right?

Many Thanks

MrFrugalFever

The promotional rate supersedes the standard 56 days interest free period which is only applicable if you make a purchase the day after your statement and then wait until the ‘pay by day’ of your next statement to pay for that purchase in full.

so for example, if your statement date was 1st of September and you bought something for £10 on the 2nd September, when your next statement comes through on the 31st September (there or thereabouts) you will then potentially have until say 25th October to pay that £10 back in full before interest is charged. If you decide to only pay back £5 then on your next statement you will see some interest.

This isn’t an exact example so please don’t take it for gospel as there are many factors involved with dates and timelines etc but AIUI this is how it works.

MFR123

So in my case, are they going to expect me to pay £700 by the end of the first month?

grumbler

MrFrugalFever said:

you make a purchase the day after your statement and then wait until the day of your next statement to pay for that purchase in full.

It's the due date, not the statement day, when the payment is required. For 56 days the due date is about 26 days after the statement date.

so for example, if your statement date was 1st of September and you bought something for £10 on the 2nd September, when your next statement comes through on the 31st September (there or thereabouts) you will then potentially have until say 25th October to pay that £10 back in full before interest is charged.

This is correct, but only if £10 was the only purchase in this statement month. If there were other purchases and the balance isn't paid in full, interest will be charged on all purchases starting from the day each one was made.

Vinknut

MFR123 said:

So in my case, are they going to expect me to pay £700 by the end of the first month?

No, why would they do that?

If you don't pay the full amount, you'll be charged interest on the full amount - however your interest rate is 0%, so they do charge you interest, on the full amount, it's just that the interest is 0%.

You need to make the minimum payment (and whatever other conditions are in the T&Cs) to maintain the 0% interest rate.  As soon as the rate is ended, if you do not pay off the full balance, you will be charged interest on the full balance at whatever the standard interest rate is.