Interest free period and buying abroad

carlosthejackal

I am going to America and will be buying a gift costing around £1500. I don't have the money in my bank, so I was thinking of getting a credit card to pay for it in the store there.

Capital One Card has "0% on purchases until your February 2009 statement". However it states that the interest free period is a "Maximum of 56 days for purchases where the balance is paid in full every month. 0 days for balance transfers and cash."

What does this mean in reality? On the 1st Feb if I spend £1500 on this card do I just have to pay back the full amount (interest free) by Feb 2009? That means I will only pay £1500 as long as I pay £150 off each month for 10 months.(Not sure about that 56 day small print though)

Also it states Foreign currency conversion charge 2.75%. So will that mean buying something costing £1500 in a shop will cost me £1541.25?

Are there any similar but better alternatives?

Thanks for any help - don't wanna get caught out.

gt94sss2

carlosthejackal wrote: »

What does this mean in reality? On the 1st Feb if I spend £1500 on this card do I just have to pay back the full amount (interest free) by Feb 2009? That means I will only pay £1500 as long as I pay £150 off each month for 10 months.(Not sure about that 56 day small print though)

You will pay £1500 as long as you pay it off in full by Feb 2009 - but each month you must pay at least the minimum payment on the card (normally about 2.5% of the balance).. so if you were paying £150/month that would be fine.

Also it states Foreign currency conversion charge 2.75%. So will that mean buying something costing £1500 in a shop will cost me £1541.25?

Basically - they build their fee into the exchange rate when they convert the purchase from dollars to pounds..

Are there any similar but better alternatives?

The Post office credit card and the Nationwide credit card don't charge any foreign currency conversion charges.. so you may want to see if they are doing any 0% on purchases offers.

Regards
Sunil

CannyJock

Think you've got it sussed.

MoneyExtra shows Egg is offering 2.65% on currency transactions abroad, but 2.75% is standard otherwise.

0% purchases card is how I'd do it from what you've said. Your minimum repayment would be 2.5% of the £ 1541.25, so £ 38.53. Paying £ 150 is the safe way to make sure you clear the balance interest free before the end of your introductory period.

carlosthejackal

That's great guys thanks for the advice.

Credit card here I come!

Just out of interest what is that 56 day limit?

CannyJock

carlosthejackal wrote: »

That's great guys thanks for the advice.

Credit card here I come!

Just out of interest what is that 56 day limit?

56 days is just their normal terms for "interest free" outside of the introductory period.

Idea is you spend money 1 days after you get your statement. Your next statement will be say in 28 days time, and it'll give you 28 days to pay before you incur an interest charge (exact number of days won't be exact, but you get the idea).

King_Of_Fools

Assuming you plan to bring the £1500 item back to the UK, have you taken into account the £262.50 VAT you will need to pay plus any duty?