How does an interest free period actually work?

mark_cycling00

Apologies if this is a simple question but I haven't had a credit card for a long long time.

I've applied for a card with "15 months interest free" on spending.

Does this mean I can spend up to the credit limit over 15months, save the cash to get interest and then pay it off?

I was hoping so but I might be making a big assumption....

Thanks

Woodstok2000

Yes, any spending you do for the first 15 months will be interest free. You will still need to make the minimum repayment each month, and interest will start on the full balance immediately from Month 16 so make sure you pay it off promptly at the end. There's a good stoozing guide on the main MSE site which covers this in detail.

flaneurs_lobster

Correct, in effect you only need to make the minimum monthly payment shown on the statements to not pay any interest for the duration of the interest-free period.

On a "standard" card you would need to clear the whole statement balance each month to not pay interest.

As you say, at the end of the interest free period you need to clear the whole debt to avoid charges.

mark_cycling00

Mavy thanks for confirming!!

prowla

The easiest way to ensure you don't miss the minimum payment is to set up a direct debit for the required amount so it's all done automatically for you.

Watch out for the precise date of the end of the interest-free period, as it may be based on the date of issue of the card, rather than the scheduled payment date.

The_Groat_Counter

It's a totally legit question @mark_cycling00, no apologies needed for asking it!

As others have said - and it's the one thing that can trip people up who aren't familiar with these deals - you must make the minimum repayment every month, if not you will forfeit the 0% interest offer.

(Sometimes people erroneously think that no repayment whatsoever is due for the duration of the offer period, for example '15 months' - alas, this is definitely not the case!)

As stated above, the best way to do this is by Direct Debit (though obviously the bank account from which the DD is taken needs enough money in it for this to work!).

The way the minimum repayment amount is calculated varies by credit card provider and sometimes by the specific credit card type. You should be able to find this out before taking out a card with a 0% interest offer.

mark_cycling00

It's the larger of £25 or 1% of the outstanding debt. So now I know what to pay to avoid losing the 0%

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/comment/82078469#Comment_82078469

The OP needs to check the T&Cs. Although correct for most cards, MBNA, for instance limits it to the first 60 days,

Brie

https://forums.moneysavingexpert.com/discussion/comment/82078842#Comment_82078842

I was about to say similar. I've had cards where anything I bought in the first 2 or 3 months would be interest free for the full 15 months. The reason you need to double check this is that if it's only for purchases in the first 3 months and you use the card to purchase something in month 4 interest may be charged from the day of purchase on that and any subsequent purchases until the full balance is cleared, including those made in the initial period that aren't accruing any interest.

So if this card is like this then stop using it after the initial period. And as always set up your DD to take the minimum payment automatically every month. The alternative is to set up a specific amount for the DD which will guarantee the balance will be cleared by the end of the interest free period.

mark_cycling00

I didn't realise this was called stooging

This nationwide credit card offer has been mentioned on the stooging board and it seems ligit. 15months interest free spending

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/82079050#Comment_82079050

Just made me double-check the interest free purchase period on my newish Chase Credit, 0% until Aug 27.

The current offer on that card is 3 months.