Quick question about 0% offers and interest

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
5 posts
WS6R6
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Quick question about 0% offers and interest

Postby WS6R6 » Sun Dec 22, 2013 2:47 pm

I'm curious, if you spend say 5k on a card w/ 15 months interest free and have a $500 balance left at the end of 15 months do you start paying interest on that 500 or do you get charged interest for the original purchase price of 5k? Surely you don't get back tracked and charged interest over the whole 15 months on 5k if it isn't fully paid off in time? Seeing the thread about the best buy purchase with an instant $1000 interest charge got me thinking about it.

Thanks
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Dining + Entertainment 2x: [color=navy"]Citi Thank You Preferred[/color]
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Rotating 5%: [color=darkorange"]Discover It[/color], [color=blue"]Chase Freedom[/color]
Restaurants 5x: [color=lime"]Citi Forward[/color]
Gas 5%: [color=gray"]PenFed Platinum Rewards[/color]
Future: [color=red"]US Bank Cash +[/color]


Smart_Shopper
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Postby Smart_Shopper » Sun Dec 22, 2013 3:49 pm

It depends on the terms of your agreement. Most major cards offer no interest for the entire promotional period. The interest will begin on the balance remaining when your statement closes out the last statement of the promo period. So, in your example, the interest will begin calculating on the $500 balance.

Store card tend to offer deferred interest during the promo period. If the balance is not paid in full during the promo period, the deferred interest will be added to the statement following the expiration of the promo period.

I think with the CARD act, your statement must now show you the amount of deferred interest accumulating and the date that it will be added if not paid in full.

WS6R6
Platinum Member
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Posts: 60
Joined: Tue Sep 25, 2012 11:52 am
Location: Kansas

Postby WS6R6 » Sun Dec 22, 2013 4:01 pm

Thanks for the reply. I asked because I want to keep my options open for purchasing a ring whether that be on a card or through the store w/ a 0% interest offer. So it sounds like I'd need to make sure there won't be any deferred interest through the store. Obviously I would have a plan to pay it off in time but just in case it would be better to only have interest charged on the remaining balance such as with a card vs possibly getting slapped with a bunch of interest in the event I couldn't pay for some reason.

Thanks
Travel 3x, Groceries + Gas 2x: [color=Orange"]AmEx PRG[/color] (Closed)
Restaurants + Travel 2x: [color=navy"]Chase Sapphire Preferred[/color]
Groceries 3%, Gas + Department Stores 2%: [color=blue"]AmEx BCE[/color]
Dining + Entertainment 2x: [color=navy"]Citi Thank You Preferred[/color]
Hotels 5x: [color=Black"]Chase Marriott Rewards Premier[/color]
Rotating 5%: [color=darkorange"]Discover It[/color], [color=blue"]Chase Freedom[/color]
Restaurants 5x: [color=lime"]Citi Forward[/color]
Gas 5%: [color=gray"]PenFed Platinum Rewards[/color]
Future: [color=red"]US Bank Cash +[/color]

Smart_Shopper
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Posts: 34
Joined: Wed May 22, 2013 3:56 pm
Location: United States

Postby Smart_Shopper » Sun Dec 22, 2013 4:10 pm

Sounds like a plan. If you did go with a store card that offers deferred interest and saw that you couldn't pay it off in time you still may have options available.

1) You could transfer the balance to another card with no interest. A balance transfer fee will usually be involved, but it will more than likely be much lower than any deferred interest amount you would pay.

2) If you have an established relationship with a credit union, you could take out a signature loan. No balance transfer fee, but you will pay interest. Again, probably much lower than any deferred interest amount. Also, IME, credit unions interest rates tend to be lower than bank rates.

WS6R6
Platinum Member
Platinum Member
 
Posts: 60
Joined: Tue Sep 25, 2012 11:52 am
Location: Kansas

Postby WS6R6 » Sun Dec 22, 2013 4:24 pm

Definitely. PenFed will be my 'go to' for auto and home loans as well.
Travel 3x, Groceries + Gas 2x: [color=Orange"]AmEx PRG[/color] (Closed)
Restaurants + Travel 2x: [color=navy"]Chase Sapphire Preferred[/color]
Groceries 3%, Gas + Department Stores 2%: [color=blue"]AmEx BCE[/color]
Dining + Entertainment 2x: [color=navy"]Citi Thank You Preferred[/color]
Hotels 5x: [color=Black"]Chase Marriott Rewards Premier[/color]
Rotating 5%: [color=darkorange"]Discover It[/color], [color=blue"]Chase Freedom[/color]
Restaurants 5x: [color=lime"]Citi Forward[/color]
Gas 5%: [color=gray"]PenFed Platinum Rewards[/color]
Future: [color=red"]US Bank Cash +[/color]



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