topic Re: How do 0% cards work? A distinction question, please help. in Credit Cards

How do 0% cards work? A distinction question, please help.

skigirl916 — Sun, 12 Feb 2017 15:48:10 GMT

Okay, so I know if you buy, for example, a refrigerator at Lowe's on 0% for 12 months, that if you don't pay off the balance in that 12 months, the interest that you would have paid and that has accrued all during that 12 months just gets lump added on at the end of the 12 months and you have this hefty additional chunk of a balance at the end. (That didn't actually happen to me - thankfully - because I could see the end date and the pending interest amount that would apply.)

But what happens with balance transfers that you get on a 0%? Does the same thing happen? Or are you truly given a 0% for the trial period, and only once that period is over, the higher APR hits?

Same question with trial period APR. What if you get a trial period of a crazy low APR, and then after that it's raised?

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 17:09:37 GMT

@skigirl916 wrote:
Okay, so I know if you buy, for example, a refrigerator at Lowe's on 0% for 12 months, that if you don't pay off the balance in that 12 months, the interest that you would have paid and that has accrued all during that 12 months just gets lump added on at the end of the 12 months and you have this hefty additional chunk of a balance at the end. (That didn't actually happen to me - thankfully - because I could see the end date and the pending interest amount that would apply.)

But what happens with balance transfers that you get on a 0%? Does the same thing happen? Or are you truly given a 0% for the trial period, and only once that period is over, the higher APR hits?

Same question with trial period APR. What if you get a trial period of a crazy low APR, and then after that it's raised?

Hey, great question. So there are two distinctions in types of 0% cards. The store cards are typically called deferred interest like you said the interest is kept track of and if the entire promotional balance is not paid in time, you have to pay that deferred interest. In your case when the promotional balance was paid off, you're good to go.

For cards that have a 0% introductory APR whether it's on just balance transfer, sometimes it's on balance transfers and purchases. This is a true 0% APR period. It'll state the end of the promotional APR period. After that period is over, they begin charging you your regular interest rate. They can't go back and collect interest like they do on deferred interest cards.

The same as the would work for a trial APR, it's a true trial APR and not a deferred situation. Hope that helps

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 17:10:43 GMT

It does not accrue at all it's as if it didn't exist for those 12 months for Balance transfers or 0% offers if lowe'a does that that's a really shady practice.

Re: How do 0% cards work? A distinction question, please help.

MrsCHX — Sun, 12 Feb 2017 17:12:37 GMT

This is good to know! I assumed BT cards worked the same as store card promo financing.

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 17:15:03 GMT

Ozix thanks for the clarification they should tell consumers up front in their ads that any interest accrued will be due and payable the first day after your 0% period ends.

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 17:38:20 GMT

Lowe's and Home Depot do the same thing with the deffered interest. It always says fairly clearly, No interest for 12 Months if Paid in Full.

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 17:59:05 GMT

Yeah but to me as a consumer that sounds like okay no interest for 12 months then on the 13th month you'll start getting charged interest.

Re: How do 0% cards work? A distinction question, please help.

heavyjay — Sun, 12 Feb 2017 18:07:33 GMT

@Anonymous wrote:
Yeah but to me as a consumer that sounds like okay no interest for 12 months then on the 13th month you'll start getting charged interest.

They make it clear that interest goes back to day 1 if not paid by the end of the promo period. What I don't like is that they leave it up to you to do the math on how much you need to pay each month. That can get confusing for people who carry balances that include both promotional and regular purchases.

From Lowes website:

**No interest if Paid in full within six months. Offer applies to purchase or order of $299 or more on your Lowe's Consumer Credit Card. Interest will be charged to your account from the purchase date if the promotional purchase is not paid in full within six months. Minimum monthly payments required. No interest will be assessed on the promotional purchase if you pay the promotional purchase in full within six months from the purchase date. If you don't, interest will be assessed on the promotional purchase from the purchase date. Depending on purchase amount, promotion length and payment allocation, the required minimum monthly payment may or may not pay off purchase by end of promotional period. Some or all of the minimum payment based on the promotional balance may be applied to other account balances. Regular account terms apply to nonpromotional purchases and, after promotion ends, to promotional purchases.

Re: How do 0% cards work? A distinction question, please help.

austinguy907 — Sun, 12 Feb 2017 18:12:26 GMT

Always read the T&C's for each card. Deferred interest may get you 1 time but, I'll put money on you reading things before doing it again.

If you don't have the money to cover the balance in full then, it's not really a good idea to buy it.

As to the BT 0% vs store 0%

Typically when you put something on a 0% offer through a purchase you're not charged anything until the offer expires and the clock starts ticking then.

When you do a BT to a 0% card though you're usually paying 1-3% up front for it which is how the CCC's pay for offering the 0% period.

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 18:34:59 GMT

The Deferred interest programs hit you with all of the interest at once of original purchase. It doesn't matter if you have 10 dollars or 5,000 left. if you don't pay off a 0% credit card it just hits you with interest the month after expiration on whatever that last statement balance was. So there is Beauty and disaster on how diligent you are in paying it off. If you can qualify for a bank card with a large credit limit you don't need a Lowe's card. However Lowes has ongoing deferred-interest plans whereas a bank credit card loses much of its incentives after 12 months on a big buy.

Re: How do 0% cards work? A distinction question, please help.

K-in-Boston — Sun, 12 Feb 2017 18:35:31 GMT

@Anonymous wrote:
It does not accrue at all it's as if it didn't exist for those 12 months for Balance transfers or 0% offers if lowe'a does that that's a really shady practice.

That's always been clearly explained, and it's not just Lowe's (Synchrony). Every retail card that I know of does this with 0% deferred interest promotions - that's the "deferred" part of it. On all of my retail cards that I have used in recent memory with a 0% offer (Amazon (Synchony), Best Buy (Citi), Home Depot (Citi) and Lowe's (Synchrony), the billing statements clearly show the accrued (but deferred as long as the purchase is paid in full by the promo end date) interest and the date that the balances must be paid to avoid paying the (usually massive 20%+) interest.

Re: How do 0% cards work? A distinction question, please help.

Anonymous — Sun, 12 Feb 2017 18:52:42 GMT

Less than 10% of people read the terms and conditions just FYI. Though it may be prudent to do so it's just something that's not done.

And lawsuits have been filed and won on the consumers side citing that its unreasonable to expect people to read a 30 page document which most done read.

Re: How do 0% cards work? A distinction question, please help.

fltireguy — Sun, 12 Feb 2017 23:41:52 GMT

@Anonymous wrote:
It does not accrue at all it's as if it didn't exist for those 12 months for Balance transfers or 0% offers if lowe'a does that that's a really shady practice.

Matt4200 - we are talking about 2 totally different things. a 0% promotion on a BT for 12 months, for example is exactly that.

Lowe's is an INTEREST DEFERRED promotion. If you dont have it paid off within the specified timeframe, the interest is retroactive to day one. A normal retail zero percent offer. It's pretty clear - even in the advertising. It's very clear - not like you are stating!

a 0% BT, or promo rate on a credit card, is zero percent for the specified time, and then, after that time ends, then the interest will accrud - it will not start before then, and will NOT be retroactive..

What Lowes, and most other retailers that offer 0%, does, isn't shady, or deceptive. It's very clearly spelled out. No questions. It doesnt get ANY clearer than what it says below IN BOLD PRINT AS WELL