0% APR offer expiration and trailing interest?

[Anonymous]

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

[Shooting-For-800]

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

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I believe it depends on the card.

Capital One tells you each month how much to pay to avoid interest charges.

They are one of the only companies that allows you to carry a 0% balance and make purchases without charging interest against the 0% balance if you do not pay it off after making a purchase.

[Brian_Earl_Spilner]

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@Shooting-For-800 wrote:

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

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I believe it depends on the card.

Capital One tells you each month how much to pay to avoid interest charges.

They are one of the only companies that allows you to carry a 0% balance and make purchases without charging interest against the 0% balance if you do not pay it off after making a purchase.

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Yup, they're very transparent in that respect. Interest is charged separately. That also includes cash advances. When statement cuts, you'll see interest for normal purchases and interest for cash advances.

[delaney1]

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

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I’m not understanding this at all. Why would you not have the entire 12 mos to carry a balance? Explain it to me like I’m five. Thanks. 

[NRB525]

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

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I do not think this is an accurate statement. 

CC Promo interest has a definite end date, stated on each credit card statement. This applies whether it is a new card with a 12 month promo, or a promo added to an existing card. Can apply to multiple promos as well, one on Spend, another on a BT, and another BT later. Each is a specific tranche of debt, with a specific end date for that tranche. Interest turns on as of that date and not before.

Please provide a link to the comments.

[CreditInspired]

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

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This statement the way it's written is not exactly true. When a CCC gives you a 12-month 0% APR period, you get exactly 12 months to use the CC free of interest. As long as the entire balance is paid off, you do not pay 1cent of interest or any trailing interest. EXAMPLE: If you get a 12-month promo 0% card Jan1, 2019 and put $5K purchases on it, as long as that $5K is PIF come December 31, 2019, you owe NO interest, no trailing interest, NADA.

People who get hit with interest and/or trailing interest are those who don't PIF that $5K prior to the expiration of the promo period. Trailing interest occurs when people carry balances on their cards.

Here is an article from SaverLife that defines trailing interest:

https://www.saverlife.org/ask-an-expert/what-is-trailing-interest/

[Anonymous]

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@CreditInspired wrote:

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

---

This statement the way it's written is not exactly true. When a CCC gives you a 12-month 0% APR period, you get exactly 12 months to use the CC free of interest. As long as the entire balance is paid off, you do not pay 1cent of interest or any trailing interest. EXAMPLE: If you get a 12-month promo 0% card Jan1, 2019 and put $5K purchases on it, as long as that $5K is PIF come December 31, 2019, you owe NO interest, no trailing interest, NADA.

People who get hit with interest and/or trailing interest are those who don't PIF that $5K prior to the expiration of the promo period. Trailing interest occurs when people carry balances on their cards.

Here is an article from SaverLife that defines trailing interest:

https://www.saverlife.org/ask-an-expert/what-is-trailing-interest/

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That makes sense tho what happens to new purchase that post after the 0% APR promo ends. Do you still have a grace period at this point? 

Here is an example I found https://ficoforums.myfico.com/t5/Credit-Cards/Help-Paid-my-statement-balance-in-full-but-charged-interest/td-p/4633222 

Somehow how i got the idea you need to pay you satatement balances in the full the last two months to make sure you have that grace period. 

[NRB525]

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@Anonymous wrote:

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@CreditInspired wrote:

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

---

This statement the way it's written is not exactly true. When a CCC gives you a 12-month 0% APR period, you get exactly 12 months to use the CC free of interest. As long as the entire balance is paid off, you do not pay 1cent of interest or any trailing interest. EXAMPLE: If you get a 12-month promo 0% card Jan1, 2019 and put $5K purchases on it, as long as that $5K is PIF come December 31, 2019, you owe NO interest, no trailing interest, NADA.

People who get hit with interest and/or trailing interest are those who don't PIF that $5K prior to the expiration of the promo period. Trailing interest occurs when people carry balances on their cards.

Here is an article from SaverLife that defines trailing interest:

https://www.saverlife.org/ask-an-expert/what-is-trailing-interest/

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That makes sense tho what happens to new purchase that post after the 0% APR promo ends. Do you still have a grace period at this point? 

Here is an example I found https://ficoforums.myfico.com/t5/Credit-Cards/Help-Paid-my-statement-balance-in-full-but-charged-interest/td-p/4633222 

Somehow how i got the idea you need to pay you satatement balances in the full the last two months to make sure you have that grace period. 

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In the case of the link you provided, that was a 0% Promo interest period that expired on May 9. The poster there should have worked to pay down the entire balance of the card, so that it was zero by May 8. In that case, the time period would have clicked over on May 10, and with a zero balance, the grace period would be intact.

Because that poster had a balance on May 9, that balance was then subject to interest charges. The year long "grace period" had ended at that point, May 9.

The best course of action is to time your payments on a 0% APR promo offer, so the entire card balance is at $0 by the expiration date of the 0% offer. This does require slowing down (stopping) new charges for a time while you ensure these charges go from Pending to Posted, the paying them all off by the expiration of the interest free period. It is not necessary to do this two months out, however.

If you do end up going over that date period, then the card still needs to be brought to a true $0 balance (not just paying the statement balance if you continue to use the card after the statement). The $0 balance, after the expiration of the 0% offer, is what generally resets the clock. There are some situations of trailing interest, so checking the next statement date to see if any trailing interest, is a follow on verification.

And at the end of the day, the interest charges are usually minor, and you did get 0% for a long time, so that's a benefit.

[Anonymous]

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@NRB525 wrote:

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@Anonymous wrote:

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@CreditInspired wrote:

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

---

This statement the way it's written is not exactly true. When a CCC gives you a 12-month 0% APR period, you get exactly 12 months to use the CC free of interest. As long as the entire balance is paid off, you do not pay 1cent of interest or any trailing interest. EXAMPLE: If you get a 12-month promo 0% card Jan1, 2019 and put $5K purchases on it, as long as that $5K is PIF come December 31, 2019, you owe NO interest, no trailing interest, NADA.

People who get hit with interest and/or trailing interest are those who don't PIF that $5K prior to the expiration of the promo period. Trailing interest occurs when people carry balances on their cards.

Here is an article from SaverLife that defines trailing interest:

https://www.saverlife.org/ask-an-expert/what-is-trailing-interest/

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That makes sense tho what happens to new purchase that post after the 0% APR promo ends. Do you still have a grace period at this point? 

Here is an example I found https://ficoforums.myfico.com/t5/Credit-Cards/Help-Paid-my-statement-balance-in-full-but-charged-interest/td-p/4633222 

Somehow how i got the idea you need to pay you satatement balances in the full the last two months to make sure you have that grace period. 

---

In the case of the link you provided, that was a 0% Promo interest period that expired on May 9. The poster there should have worked to pay down the entire balance of the card, so that it was zero by May 8. In that case, the time period would have clicked over on May 10, and with a zero balance, the grace period would be intact.

Because that poster had a balance on May 9, that balance was then subject to interest charges. The year long "grace period" had ended at that point, May 9.

The best course of action is to time your payments on a 0% APR promo offer, so the entire card balance is at $0 by the expiration date of the 0% offer. This does require slowing down (stopping) new charges for a time while you ensure these charges go from Pending to Posted, the paying them all off by the expiration of the interest free period. It is not necessary to do this two months out, however.

If you do end up going over that date period, then the card still needs to be brought to a true $0 balance (not just paying the statement balance if you continue to use the card after the statement). The $0 balance, after the expiration of the 0% offer, is what generally resets the clock. There are some situations of trailing interest, so checking the next statement date to see if any trailing interest, is a follow on verification.

And at the end of the day, the interest charges are usually minor, and you did get 0% for a long time, so that's a benefit.

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Thanks!

This clears it up and likely for many others down the road. 

[CreditInspired]

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@NRB525 wrote:

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@Anonymous wrote:

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@CreditInspired wrote:

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@Anonymous wrote:

So this is a topic I stumbled upon and curious that I understand it correctly.

If you have a 0% APR offer on your credit card and your promo comes to a close and you have carried any balance over the last two months your grace period is gone. When the promo ends you will incur interest.

So in theory a 1 year 0% APR period for example is only 10 months cost free. To avoid this you need to pay your statement balances in full for the next two months to avoid trailing interest and reset your grace period.

Hopefully this is useful for others down the road with the same question. 

---

This statement the way it's written is not exactly true. When a CCC gives you a 12-month 0% APR period, you get exactly 12 months to use the CC free of interest. As long as the entire balance is paid off, you do not pay 1cent of interest or any trailing interest. EXAMPLE: If you get a 12-month promo 0% card Jan1, 2019 and put $5K purchases on it, as long as that $5K is PIF come December 31, 2019, you owe NO interest, no trailing interest, NADA.

People who get hit with interest and/or trailing interest are those who don't PIF that $5K prior to the expiration of the promo period. Trailing interest occurs when people carry balances on their cards.

Here is an article from SaverLife that defines trailing interest:

https://www.saverlife.org/ask-an-expert/what-is-trailing-interest/

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That makes sense tho what happens to new purchase that post after the 0% APR promo ends. Do you still have a grace period at this point? 

Here is an example I found https://ficoforums.myfico.com/t5/Credit-Cards/Help-Paid-my-statement-balance-in-full-but-charged-interest/td-p/4633222 

Somehow how i got the idea you need to pay you satatement balances in the full the last two months to make sure you have that grace period. 

---

In the case of the link you provided, that was a 0% Promo interest period that expired on May 9. The poster there should have worked to pay down the entire balance of the card, so that it was zero by May 8. In that case, the time period would have clicked over on May 10, and with a zero balance, the grace period would be intact.

Because that poster had a balance on May 9, that balance was then subject to interest charges. The year long "grace period" had ended at that point, May 9.

The best course of action is to time your payments on a 0% APR promo offer, so the entire card balance is at $0 by the expiration date of the 0% offer. This does require slowing down (stopping) new charges for a time while you ensure these charges go from Pending to Posted, the paying them all off by the expiration of the interest free period. It is not necessary to do this two months out, however.

If you do end up going over that date period, then the card still needs to be brought to a true $0 balance (not just paying the statement balance if you continue to use the card after the statement). The $0 balance, after the expiration of the 0% offer, is what generally resets the clock. There are some situations of trailing interest, so checking the next statement date to see if any trailing interest, is a follow on verification.

And at the end of the day, the interest charges are usually minor, and you did get 0% for a long time, so that's a benefit.

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^^^this

Thanks @NRB525 for the step-by-step guide/response to OP. I wanted to respond but couldnt get my brain in gear to type it 🤣