what is deferred interest?

spaceman99

2 years ago we bought a sofa from Argos. By taking out their store card, we got 2 years interest free on the cost of the sofa (around £800).

Today I received a letter from Argos along the lines of "we hope you enjoyed your interest free period" and "this period is now coming to a close" etc etc. We have around £350 outstanding on the account.

It states that, if we do not pay the balance in full, we will now be moved onto an interest-chargeable account (something stupid like 29% - so I will be looking to move this off the card!). It also states, in the final paragraph, that if I don;t pay the balance in full "deferred interest will be applied, payable from the date of purchase".

What is meant by this?

YorkshireBoy

Your purchase cost has been quietly accruing interest (presumably at around 30% APR) in the background.

Argos (or their finance provider) will waive this interest if you settle your account by the due date. Otherwise, they'll add this interest to the account to form the new balance.

A word of warning...when you say you'll "move this off the card" do you mean you'll balance transfer the debt to another card? If so you may be in for a shock because I seem to remember that, due to the Argos card's unique 19(?) digit card number, normal BT's are not possible.

If this is the case, and you don't have the cash to settle, you may need to apply for an SBT card such as Egg or an MBNA run card.

spaceman99

YorkshireBoy wrote: »

Your purchase cost has been quietly accruing interest (presumably at around 30% APR) in the background.

Argos (or their finance provider) will waive this interest if you settle your account by the due date. Otherwise, they'll add this interest to the account to form the new balance.

A word of warning...when you say you'll "move this off the card" do you mean you'll balance transfer the debt to another card? If so you may be in for a shock because I seem to remember that, due to the Argos card's unique 19(?) digit card number, normal BT's are not possible.

If this is the case, and you don't have the cash to settle, you may need to apply for an SBT card such as Egg or an MBNA run card.

Many thanks for this - its great advice!

I think what I'll do then is ring them up and pay the balance in full with my debit card, and then close the account.

This will put my bank account into my agreed overdraft limit, but this will only be temporary. I have enough credit on my Virgin Card to do a balance transfer (they allow you to transfer money to your bank account). I've had my Vigin card for 13 months, but any new balance tranfers they are giving me at 0.9% (plus the 2.9% tranfer fee) until October 2008.

Does this sound like a good plan?

YorkshireBoy

spaceman99 wrote: »

Does this sound like a good plan?

Anything that avoids (3 figure) interest is a good plan!

neverdespairgirl

Definitnely a good plan - the interest charged will be horrific if you don't pay the Argos card off in time.