Credit Card confusion

banja

banja

banja

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Does anyone understand the interest free periods offered by Credit Cards? I called my bank for clarification. I also went into my bank to ask. They gave me completetly different answers.

The phone chap said I have 56 days interest free but it's a fixed time from the date of my statement. So if I buy something between the statement periods the interest free period is reduced by the difference in days! What??

In the branch they said it's 56 days from when you pay (buy), regardless. Which sounds correct.

Further confusion. On the website it states you have 56 days interest free if you pay your current and previous statement in full. Suggesting if you don't pay your balance you don't get the interest free, which would mean you never get 56 days interest free??

Colour me confused.
 
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I believe;

You get upto 56 days. If you buy an item just after you receive your statement you wont get charged any interest on that item as long as your CC is fully paid off at the next statement

i.e;

5rd May - Statement Produced - Nil Balance
6th May - You buy £400 HDTV
2nd June - Statement Produced - £400 balance with est interest for next statement
16th June - You pay full statement off meaning no interest

6th may to 16th june = 56 days max

Dates may be slightly off but general idea..
 
That sounds right actually, thanks for your input.

So the call centre monkey was right, but the full time bank employee hasn't a clue :)
 
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I have recently been reading about these and have read conflicting articles. The below article seems to imply if you pay the minimum monthly payments, then you don't loose the interest free period, but I have also read information confirming what the above says.

http://www.moneysavingexpert.com/cards/best-0-credit-cards

So which is it? Does the card have to be paid off in full every month, or will paying the minimum amount suffice?
 
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I always pay mine off the same or following month.

What happens if you buy say a tv for £1200, then every month pay off £200 for 6 months. Would you still incur interest (I assume you would?). Or do you only pay interest if you don't meet the minimum payment?
 
Flanders said:
So which is it? Does the card have to be paid off in full every month, or will paying the minimum amount suffice?
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You have to pay off the total bill not to pay any interest, this is how they make their money. Otherwise no one would ever take out a loan, you'd be getting it interest free from the cc instead.
 
bledd. said:
I always pay mine off the same or following month.

What happens if you buy say a tv for £1200, then every month pay off £200 for 6 months. Would you still incur interest (I assume you would?). Or do you only pay interest if you don't meet the minimum payment?
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On the 0% cards, you would start paying interest if you don't make the minimum payments. They may even cancel the 0% agreement. If you pay off more than the minimum payment then it continues to be interest free. This is why some people go for the credit cards rather than loans for smaller amounts of money.

Mr.E. said:
It's from the day you buy the item, as shown above.
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What are you talking about?
 
Clown said:
On the 0% cards, you would start paying interest if you don't make the minimum payments. They may even cancel the 0% agreement. If you pay off more than the minimum payment then it continues to be interest free. This is why some people go for the credit cards rather than loans for smaller amounts of money.

What are you talking about?
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I'm guessing its in the terms and conditions somewhere whether or not this applies then? Doesn't seem to be clear from the "summary boxes" provided before most of the applications.
 
Online it says my card says it's 0% of purchases for 3 months.
Typical 15.9% APR variable.
Up to 56 days interest-free period on purchases.

Does that mean buying something for £1200, then paying off £600 in the first 3 months @ £200 a month. I will then be charged 15.9% on the remaining £600?, making it £695.40 remaining? or is it £607.95?

Feel like dumb ass asking, but I just don't know :)
 
It would be are a rate of 15.9% APR (annually).

It means if you would start getting charged interest on the remaining £600 which for that month looks like it would be around £608? Then if you don't pay that it would be 15.9% APR on £608 plus whatever fee they charge you for not making a payment.

Now assuming you would carry on paying £200 a month, interest won't snowball and you would most likely be fine.

Problems with credit cards occur when people only make minimum payments all the time. If you made the minimum payment of £20 or so, it basically means half the money you're paying off is interest and you're hardly paying off the debt. Couple this with people not making any payment and the costs spiral. Bad managment of money means bad debt. Bad management of bad debt means you're likely to screw yourself.

This is my understanding of it all in my amature financial advisor capacity :p
 
Great, that makes sense. So for £1200 paid off over 6 months, if I put £200 in each month then the total extra to pay would be around £15-20.

So if I was planning to buy something for that value, I might as well get another card that has 6 months free and use that to get it.

50kg of beef jerky, here I come
 
If you've never had a Virgin (MBNA) card, you could possibly get 12 months interest free. They also do 16 months 0% balance transfers which last time I checked, you could transfer to your bank and use as cash! Factor in the 3% fee and it's a nice cheap loan.
 
So we still have two differing opinions on my original query. Some who say it's upto 56 days, as the cut off point will be a fixed point 56 days after the previous statement date, and some who believe it's 56 days from when you make the purchase.

:confused:
 
bledd. said:
Can someone answer my question please :)
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You would pay interest on any balance outstanding from the day you first paid (a deposit I assume) on the television on a normal card, as long as you meet minimum payments on a 0% card you would not incurr interest for the period of zero percent.
 
Forget about the interest free for upto 56 days. It just means, If you pay your full balance before the due date then you won't pay interest on purchases.

It is from the statement date up until the next payment date.


For example.....

You receive your first statement dated 01/01/2011 with £0 balance. The payment date is the 30th but you haven't got a balance to pay.

If you spend £1000 on the card on 02/01/2011 you wont see these transaction until the statement sent out on 01/02/2011. The payment date for this will be the 30/02/2011.

That means you get the interest free from the transaction date (02/01/2011) until the next payment date (30/02/2011)..

The reason they say "upto" is because statement and payment dates can change slightly.
 
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