0 day Grace period? BOA

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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dwelsh
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0 day Grace period? BOA

Postby dwelsh » Sat Sep 12, 2009 2:03 pm

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Bank of America sent me an invite. 0-2.99% ('based on my credit worthiness' - which is good 790-800 range) for 13 billing cycles. I could use the cash. I asked her how long the grace period was and see said, "um, ah... let me see . . . ZERO'

That sounded fishy to me. She said it is standard in the industry with all credit cards. Keep in mind I would PURCHASE NOTHING with the card. I just need some cash (new roof, timing belt went out in my car). She told me that as long as I paid on time, every time and never bought anything with the card -- that my APR would never be higher than 2.99% APR. I said, "so, If I borrowed 5 grand at say 3 percent do I pay an upfront fee of 150 bucks -- or, am I charged some snowballing nightmare that keeps charging me 3% each month because the 3% never gets paid off?" She said, "Its an APR sir. The 3% is divided over the 13 months..." It still all sounded like a fishy snow ball to me. So, again, to state my question -- if I make NO PURCHASES with the card, and get CASH ONLY (it says cash deposits or treated like balance transfers not cash advances) then as long as I get them paid off in 13 cycles - that i will have only paid 3 percent for this money (minus the 150 dollars for the finance charge)? I asked her if the APR is a TOTAL of 3 percent over 13 cycles - would the interest paid for the first cycle be something like .15%?" "I can't answer that exact sir." "I know" I said. "I'm just talking about general principles here..." She didn't want to talk any more.

It just all sounded a little too fishy for me and she was talking too fast and trying to get my routing info and bank info too fast. I said, "I'll get some research and get back with you."

So, a little help please.

Is a 0 day grace period standard on these kind of deals and DOES it NOT snowball into a giant mess (granted everything is paid on time and at least the mininium, and finally - no purchases are made on the card).

If you have some good questions for me to ask BOA, fire away please!

Thanks again.

Dean


jeffysdad
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I suspect...

Postby jeffysdad » Sat Sep 12, 2009 5:47 pm

that when they say 0 day grace period what it means is that interest starts to accrue from the moment they send you the money/initiate the transfer. Following this a grace period really wouldn't matter because you would always be carrying a balance until you paid off the debt. There typically is no grace period in effect when one carries a balance.

A traditional grace period comes into play if you pay your balance off every month. Usually it's 25 days from the time the statement cycles until the payment due date; that period is the grace period, free of interest assuming that you paid your previous balance in full by the previous due date.

If for instance you paid your minimum payment only by the previous due date, you would start accruing interest on the unpaid amount following that due date and all subsequent purchases after that due date would begin accruing interest immediately (0 grace period) because you didn't pay off the previous month's balance in full.

The presence and lengths of grace periods are of greater concern to transactors (pay off balance every month) than revolvers (carry balance month to month). If you don't carry a balance, you need to have a grace period to avoid accruing interest. If you do carry a balance, it's important to know not just your interest rate but how it's calculated --- average daily balance, balance on certain date, etc. You can bet that it's most likely to be calculated with whatever methodology is most advantagous to the bank.

Hope that helps. Feel free to correct if I got anything wrong.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

dwelsh
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I think I'll just pay off what I got and..

Postby dwelsh » Sat Sep 12, 2009 6:20 pm

then try like the dickens not to carry any more balances. But, first the roof went last fall (14k) and then last week the timing belt in the car (800 bucks).

jeffysdad wrote:that when they say 0 day grace period what it means is that interest starts to accrue from the moment they send you the money/initiate the transfer.

***Yes, the rep on the phone did say that.

Following this a grace period really wouldn't matter because you would always be carrying a balance until you paid off the debt. There typically is no grace period in effect when one carries a balance.

***I see. And, this is pretty much standard with all cards? I have used them for over 25 years but never bothered to learn much about the grace period because I had always paid them in full.

A traditional grace period comes into play if you pay your balance off every month. Usually it's 25 days from the time the statement cycles until the payment due date; that period is the grace period, free of interest assuming that you paid your previous balance in full by the previous due date.

***I see. Roger that. I think I'm starting to get it.

If for instance you paid your minimum payment only by the previous due date, you would start accruing interest on the unpaid amount following that due date and all subsequent purchases after that due date would begin accruing interest immediately (0 grace period) because you didn't pay off the previous month's balance in full.

***I see. Instant accrue for them. NICE for them.

The presence and lengths of grace periods are of greater concern to transactors (pay off balance every month) than revolvers (carry balance month to month).

**I see.

If you don't carry a balance, you need to have a grace period to avoid accruing interest.

**I would need to carry the balance for the 13 month cycle that the deal applies to.

If you do carry a balance, it's important to know not just your interest rate but how it's calculated --- average daily balance, balance on certain date, etc.

***UGH. Here is where one needs a lawyer! And, here is where I think, the heck with consolidation and have as few as cards/balances as possible . . .

You can bet that it's most likely to be calculated with whatever methodology is most advantagous to the bank.

****Understood and agreed.

Hope that helps. Feel free to correct if I got anything wrong.


***Helped a lot. I really appreciate the time and effort you put into it. Thank you very much.

***Would you have a 'top five questions' you would ask them regarding their dreaded methodology -- or, would you just keep trucking with the three different balances I currently have and not add any more complications to the pot?

***I wish the methodology stuff was some what standardized so one didn't feel like they needed a lawyer any time they ponder a new card. A lawyer to help them with all the fine print. GHEZ. . .

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Mogul of Pineapples
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Postby Mogul of Pineapples » Tue Sep 22, 2009 12:47 am

I always advise against the 0% deals like this unless you have a balance you need to transfer. It's playing with fire. I did one a couple years ago and then was hit with a job loss, and suddenly that 6k balance I had that wasn't a "real" balance suddenly turned into a balance I couldn't pay off so easily. Luckily I was able to get the income situation taken care of and able to finish paying it off just a couple weeks before the interest was going to be charged. It was one of those 12 month BT credit card deals.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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dwelsh
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Postby dwelsh » Wed Sep 23, 2009 6:59 am

Mogul of Pineapples wrote:I always advise against the 0% deals like this unless you have a balance you need to transfer. It's playing with fire. I did one a couple years ago and then was hit with a job loss, and suddenly that 6k balance I had that wasn't a "real" balance suddenly turned into a balance I couldn't pay off so easily. Luckily I was able to get the income situation taken care of and able to finish paying it off just a couple weeks before the interest was going to be charged. It was one of those 12 month BT credit card deals.


I got 6k at 3% fixed

4k at 7% APR

900 bucks at 14.4% apr

I think instead of getting still another card, and paying still another balance transfer fee -- I'll just try to aggressively pay down the two higher interest cards and not worry much about the 3%. Pay on it of course -- but get the two higher ones paid off first then snowball the rest over to the 3%. I'll consider the higher interest points as 'idiot points' to remind me to try like the dickens to neither get in this sorry shape of affairs again.

Sound ok?

Thanks.

Dean

jeffysdad
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you used to...

Postby jeffysdad » Wed Sep 23, 2009 3:15 pm

be able to call them up and beat them down on the interest rate if your credit was good. when i was carrying balances i did this all the time with great success. but that was back in the late '90s...still might be worth trying if you've got really good credit.

years ago i owed a lot on cc and finally managed to get it all paid off. but when i was carrying balances i card-surfed for the 0% deals all the time. i was very lucky to not have to deal with a job loss or catastrophic illness, so i made out quite all right. Mogul's point is well taken, though.

i'm not in the card surf game anymore but it seems to me if you sit still and behave yourself they're just going to jack up your rate anyway. a bt offers the chance of locking in a rate, as long as you're confident you can hack the terms.

btw, right now i have 10 or so major cards, none of them carry balances and the nominal aprs range from something like 6.8% up to around 12%. i bet if i started carrying a balance the rate on that card would shoot up like a rocket.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.



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