Credit Cards

[ivyalmighty]

I was just reviewing my terms & payments for my GEMB CareCredit card.

We were given $1K CL, int-free for 10 months, as long as we made min payments & bal is PIF by the end of the 10-mo period.

The min. payments required for this card are only $28/mo. I never really analyzed this payment plan, but now that I think about it, at $28/mo, only $280 would be paid by the end of those terms and then we'd be stuck w/ CareCredit's legendary high int rates on a balance of about $600 from then until forever.... most people wouldn't sit down and really think about how the min pmt they're making is going to affect their payoff later on. When I heard the terms & the 10-mo payoff plan, I just assumed without ever giving it a second thought that by paying what they requested, we would be paid off by the end of those terms!

DUH. I'm so glad we've been paying so much more than min due - by the end of this month it will be more than half paid off. I considered myself pretty financially savvy before I discovered this site, but I really don't think I was. Maybe more aware than the average American consumer, but that's not really saying much :\

[Cleanmachine]

Always, read very carefully the Terms & Conditions of any credit contract. Never, take for granted what a salesperson may tell you. If it’s not in the T& C it does not exist. Your creditor will only hold “YOU” responsible for the contract.

Unfortunately the average american consumer does not read or does not understand fully the terms and conditions of credit contracts.

In my opinion, you are pretty financially savvy. You took the first step by reading the T&C.

Clean

[haulingthescoreup]

Yup, on my BofA 0% BT card, the minimum payment is 1% of the current balance. They would be absolutely delighted if I went with that and then had to pay the remaining 90% or so of the balance at the regular APR, once the 0% expired!

This is how CCC's can make money with 0% on purchases or BT's; they hope that many people don't realize this, or won't have the self-discipline to make big enough payments.

On any special rate deal, I always just divide the balance by the term, and that's how much I need to pay it down per month.

This is one reason why minimum payments were raised by law a year or so ago. Many people found that they were making no progress in paying off their debts, or even going upside down, by making just the minimums. I'm surprised that BofA's still doing the 1% thing.

Nice catch, way to watch!

[FretlessMayhem]

Some places are even sneakier with offers like that.

The Guitar Center credit card has 12 months no interest. Let's say I charge $1000 on it, and pay it down to $5 at the end of the 12 month period. Since I didn't pay it off entirely, I then would owe back interest on the entire original balance of $1000 with their outrageous APR of 24 percent.

That's exactly why I never applied for their POS CC. I would be much better off paying on a "normal" CC instead.

[haulingthescoreup]

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FretlessMayhem wrote:
Some places are even sneakier with offers like that.

The Guitar Center credit card has 12 months no interest. Let's say I charge $1000 on it, and pay it down to $5 at the end of the 12 month period. Since I didn't pay it off entirely, I then would owe back interest on the entire original balance of $1000 with their outrageous APR of 24 percent.

That's exactly why I never applied for their POS CC. I would be much better off paying on a "normal" CC instead.

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Wow!!!

Where in the fine print did you find that little gem? I need to know where to look for that myself in the future, plus I'll pass that info on to others, so they'll know where to look too.

[grneydangl]

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FretlessMayhem wrote:
Some places are even sneakier with offers like that.

The Guitar Center credit card has 12 months no interest. Let's say I charge $1000 on it, and pay it down to $5 at the end of the 12 month period. Since I didn't pay it off entirely, I then would owe back interest on the entire original balance of $1000 with their outrageous APR of 24 percent.

That's exactly why I never applied for their POS CC. I would be much better off paying on a "normal" CC instead.

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*picks jaw up off of floor*  I can't even believe they do that... I knew about CareCredit's terms right off the bat but I don't generally read any other T&C

[CreditMizer]

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FretlessMayhem wrote:
Some places are even sneakier with offers like that.

The Guitar Center credit card has 12 months no interest. Let's say I charge $1000 on it, and pay it down to $5 at the end of the 12 month period. Since I didn't pay it off entirely, I then would owe back interest on the entire original balance of $1000 with their outrageous APR of 24 percent.

That's exactly why I never applied for their POS CC. I would be much better off paying on a "normal" CC instead.

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This is pretty common for store cards and 0% deals.  Even home depot does this.  The interest is considered interest deferred and is applied is balance is not paid off in 0% grace period.  Right now on my Home Depot statement it shows $846 in deffered interest.  If on the 13th month I have $0.01 left on the $0 account I would get hit with all the back interest.

It was same policy at Zales Jewelry when I bought engagement ring, Best Buy when I bought a HDTV, and at Hanes when we bought a new bed.

Generally this doesn't apply to BT (but always read small print) but is very common on storecards and 0% purchases.

[gettintherequick]

Yeap,

I had that on a Wells Fargo/Whitehall jewlers card that I had. It was interest free for the first 12 months and once you make it to the end of the 12th month...BAM...you get nailed. Just like I did. I didnt read the fine print and paid the price. Quite litterally!! On a loan for $3000 @ 24% interest, it hurts!!

It always pays to read the fine print.

[haulingthescoreup]

Dang! Good thing I always chicken out and pay things off long before any special rate runs out.

[ivyalmighty]

Me too, HTSU... thank goodness for it. I went back and re-read the terms, and indeed, the 26.99% APR would be retroactive to the entire balance, not just the remaining unpaid portion. Yikes...