Credit Cards... Meh, i dont get it.

[TFU] Thegoon84

[TFU] Thegoon84

[TFU] Thegoon84

Soldato
Joined
17 Jun 2009
Posts
7,089
Location
Swansea
Recently moved my man cave into our spare living room, there's loads of room there. The wife and I (honestly haha) thought it be nice to have a cinema/entertainments room for the kids.

I was looking in DFS at cinema sofa's and was going to go interest free.... However i've seen a far better and cheaper one on love sofa, but their interest free is only 12 months. Also i'm fancying a new 4k TV for in there (ready for RDR2), its been a while since we've upgraded.

We've just finished paying for our old sofa and ride to work so have more than enough disposable monthly income, we having savings but i dont want to touch as we're saving to take the kids to disney year after next.

SO.... My question is.... As i'm wanting to buy a new sofa £450 and then hopefully a decent TV in the black Friday sale.... Should i go for 0% on purchases card which will allow me to buy the sofa this week then the TV in Nov, Then have interest free repayment on both items for 32 months months? I did previously have a credit card a while ago but got stung as it was only first 6 months on purchases so paid it off quickly.

Does the below mean i could effectively go and buy the sofa £450 today and then the TV £500 end of Nov and pay £28 pcm which will be interest free? I dont wanna get stung...

0% for 32
months

18.9% APR
(Variable)

£28.13 for
32 months

Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.95% (variable), representative 18.9% APR (variable). Credit available subject to status. You'll pay a 2.88% fee to transfer a balance to this card (by way of a 0.12% refund of the initial fee) in the first 3 months. 3% balance transfer fee afterwards (minimum £3 at all times).

  • 0% on purchases for 32 months and 0% on balance transfers for 3 months. Terms and Conditions apply
  • 3% balance transfer fee applies for transfers in the first 3 months, 3% afterwards (Minimum £3 at all times)
 
Why don't you just take the required amount from your savings account and then pay the savings account back INTEREST FREE over the same period of time?

You've understood it correctly though. Purchase whatever you wish within 32months at 0% until the end of that period (from the start date, regardless of when you purchase the item).
 
Yup you are correct, they offer these details because statistically most people will not stick to the terms and end up paying a boat load of interest. Use it as you suggest and you'll be fine.
 
samurl said:
Why don't you just take the required amount from your savings account and then pay the savings account back INTEREST FREE over the same period of time?
Click to expand...

well technically he'd lose out on the interest earned in that savings account... then again it probably isn't a very high rate

what might actually be a better solution is to purchase using a credit card offering decent rewards and pay off the card using funds from the savings account (or keep the balance on the card if they offer a 0% interest period)

and then do what you suggested... "pay the savings account back" :)


I guess it all depends on the savings interest rate and the rewards available...
 
dowie said:
well technically he'd lose out on the interest earned in that savings account... then again it probably isn't a very high rate

what might actually be a better solution is to purchase using a credit card offering decent rewards and pay off the card using funds from the savings account (or keep the balance on the card if they offer a 0% interest period)

and then do what you suggested... "pay the savings account back" :)


I guess it all depends on the savings interest rate and the rewards available...
Click to expand...

This pretty much.... As we're not going for two years I've made use of ISA's so its pretty tied up to be able to take an early withdrawl.

Each to their own, end of the day I don't have much debt and would feel happier taking an interest free credit card and paying the tiny bill PCM.

So long as it says "0% of purchases means I can buy what I want (to an extent) and pay 0% for term.... I assume I need to look for things initial 0% interest on purchases tor first 60days?

samurl said:
Why don't you just take the required amount from your savings account and then pay the savings account back INTEREST FREE over the same period of time?

You've understood it correctly though. Purchase whatever you wish within 32months at 0% until the end of that period (from the start date, regardless of when you purchase the item).
Click to expand...

I get what your saying, maybe its my OCD, but having a healthy level of savings over losing £24 a month is more suitable to me... God forbid I lose my job I know I can pay off my debt quickly and not risk losing my home.... Besides that Extra £24 a month would only be sucked up.

So for me I'd rather just effetely just put it toward something I'd use.
 
[TFU] Thegoon84 said:
God forbid I lose my job I know I can pay off my debt quickly and not risk losing my home....
Click to expand...

I get ya. Only if you spend your own money and pay yourself back, you stand no chance of ending up in a situation where you may miss the 0% interest free payment (due to potentially losing your job and spending your savings faster than you expect) and start accumulating interest.

Sounds like you've made your own decision having reflected on it. As long as you're clear on the terms and conditions of the commitment then go for it :)
 
samurl said:
I get ya. Only if you spend your own money and pay yourself back, you stand no chance of ending up in a situation where you may miss the 0% interest free payment (due to potentially losing your job and spending your savings faster than you expect) and start accumulating interest.

Sounds like you've made your own decision having reflected on it. As long as you're clear on the terms and conditions of the commitment then go for it :)
Click to expand...

Cheers man. Yeah I'm set on doing the interest free puchases way... Just want to make sure I'm not missing any hidden costs or small print. I'm not a fan of credit cards, but also appreciate that if done right can be very useful.

Also I might put Starwars battle front 2 on there as I refuse to use my weekly allowance on it... Then cut the card up haha!
 
[TFU] Thegoon84 said:
Cheers man. Yeah I'm set on doing the interest free puchases way... Just want to make sure I'm not missing any hidden costs or small print. I'm not a fan of credit cards, but also appreciate that if done right can be very useful.

Also I might put Starwars battle front 2 on there as I refuse to use my weekly allowance on it... Then cut the card up haha!
Click to expand...

P.s Can I have a new TV whilst your spending?? :)
 
If you do go a credit card route then I'd always take at least 1 month off the promotion (so 31 months in this case) and set up a direct debit to have it all paid off before. Just avoids a slip up in dates or a potential missed payment which could lead to (an albeit small amount of) interest at the end of the term.
 
When comparing card terms/incentives against savings don't forget to factor inflation - relevant especially with such long 0% interest periods.
 
Russinating said:
If you do go a credit card route then I'd always take at least 1 month off the promotion (so 31 months in this case) and set up a direct debit to have it all paid off before. Just avoids a slip up in dates or a potential missed payment which could lead to (an albeit small amount of) interest at the end of the term.
Click to expand...

You should set up a direct debit to pay the minimum amount only.

Then stick any extra cash in a savings account. When it comes to the end of the period pay it off in full using the cash in savings account.

You should never ever pay more than the minimum on a 0% interest free card.
 
Russinating said:
If you do go a credit card route then I'd always take at least 1 month off the promotion (so 31 months in this case) and set up a direct debit to have it all paid off before. Just avoids a slip up in dates or a potential missed payment which could lead to (an albeit small amount of) interest at the end of the term.
Click to expand...
And also if you set up a direct debit for the first payment make sure you read the small print about how long it takes for the direct debit to get set up. I consider myself very credit/finance-savvy but got stung when I last opened an interest free card and did this. Set up a direct debit before the first payment was due, turns out they need 10 working days or something daft so they charged me interest and a fee when I "missed the payment". Scumbags. A quick call later and I got it back though :o

Next time I'll do the maths myself and setup a standing order.
 
You must log in or register to reply here.
Back
Top Bottom