0% purchase credit cards, naive query?
joeyboy
Posts: 256 Forumite
in Credit cards
Going to sound a bit dense here but I can't quite wrap my head around why companies would be offering these, and so I'm wondering if I'm misunderstanding what is being offered. Not a big user of credit cards.
So loads of companies offer these but for the sake of argument I'll go with one of Virgins cards. My partner wanted to buy a few things and spread the cost out over a few months, so I thought one of these would be the best idea. I actually misread what was being offered slightly as I assumed the 0% interest for 28 months only applied to things you purchased in the first 60 days of owning the card, however that 60 day period is only to get their 0% interest offer for balance and money transfers. The 0% on card purchases appears to be valid on all purchases for the full 28 month period.
So reading it more carefully, am I right in understanding for the next 28 months, for any purchases made on the card, there will be no interest applied to the balance (as long as minimum payment is made), a 28 month interest free loan for purchases so to speak? I feel I must be misunderstanding as it seems overly generous?
What I don't really grasp about this is why they offer it if I am understanding it right? The credit card company is making no money from this since they're charging no interest? Is it simply that after the 28 month period they hope you'll still have a balance on the card, and you'll continue to purchase things and not pay the balance in full each month?
Honestly rather than PSHE or whatever schools call it now they should do lessons on this sort of thing.:rotfl:
So loads of companies offer these but for the sake of argument I'll go with one of Virgins cards. My partner wanted to buy a few things and spread the cost out over a few months, so I thought one of these would be the best idea. I actually misread what was being offered slightly as I assumed the 0% interest for 28 months only applied to things you purchased in the first 60 days of owning the card, however that 60 day period is only to get their 0% interest offer for balance and money transfers. The 0% on card purchases appears to be valid on all purchases for the full 28 month period.
So reading it more carefully, am I right in understanding for the next 28 months, for any purchases made on the card, there will be no interest applied to the balance (as long as minimum payment is made), a 28 month interest free loan for purchases so to speak? I feel I must be misunderstanding as it seems overly generous?
What I don't really grasp about this is why they offer it if I am understanding it right? The credit card company is making no money from this since they're charging no interest? Is it simply that after the 28 month period they hope you'll still have a balance on the card, and you'll continue to purchase things and not pay the balance in full each month?
Honestly rather than PSHE or whatever schools call it now they should do lessons on this sort of thing.:rotfl:
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Comments
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- New customer acquisition
- Some will go onto revolve a balance
- Some will break the promo and pay fees
- Merchant fees income
- Cross sell opportunities
- Data
- Market dominance
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Zx81 has summed up the reasons why 'they' do it. But it is working exactly as you understand it.
I took out a 28 month interest free card from Virgin about a year ago, I've spent about £600 on it and not be charged any interest, although I do have to make the minimum payments each month.
The card was very useful in allowing me to spend more than the cash I had available when a I stoped working and before my pensions kicked in. I'm gradually clearing the balance to ensure the is no debt on the card when the interest free period runs out.
The Virgin card had an unexpected bonus: access to the Virgin Money lounges. As we live in a city with a lounge we have made a lot of visits for the free coffee and internet access.The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.0
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