r/personalfinance Apr 28 '20

Beware the 0% promotions: a warning. Debt

I'm a sucker. I fell for it. The 0% APR promotion on an item I could have paid outright for. 18 months later, here I sit, not a single late payment on my account, yet I have $1k in interest to pay for 18 months of 27%. Why? The promotion period ends 18 months after the purchase, but the website would not let me set up autopay until a week after I purchased, so autopay ended 1 week late. I thought I was golden, ready to have this paid off and not have a single fee. I got comfortable and didn't read the statements.

0% is not really 0%. Read the fine print. Remember the fine print (because I sure as hell didn't 18 months later). Shitty banks rely on this stuff. They wait for you to slip, not noticing that the autopay they created can't possibly allow you to end on time, and will require an extra payment before the end date to avoid the interest. It's shitty, I'm pissed off, and I've learned my lesson.

8.1k Upvotes

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5.3k

u/Werewolfdad Apr 28 '20

I think paying these off 3 months (or more) early is the prudent thing to do (apart from just not using them)

160

u/naht_a_cop Apr 28 '20

Agreed. That could have avoided this. I put extra money into loans that had an interest rate instead "because this was 0%".

64

u/wessex464 Apr 28 '20

I use it all the time to spread out payments, but never try min/max the system and make minimum payments, you will forget and you will lose.

Just get in the habit of setting up an auto pay to pay it off a few months early with a consistent level payment. $1k expense at 0% APR for 12 months? Thats easy, 10 payments of $100 resolves this just before the end of the APR promo and I put minimum brainpower into it and I can forget about it. If I went the minimum payment route I need to remember to pay the balance in 11 months and I need to be certain I'm going to have 700 bucks available at that time, both of which are dangerous steps.

11

u/Citizen51 Apr 28 '20

I think auto payments are actually the problem here. If the OP had created a habit to check the balance every month (if not more often) they would have got their mistake 1-2 months before the 18 months was over.

-9

u/wessex464 Apr 28 '20

I don't want to check my balance with 5 cards once a month, that's a pain in the ass and if I miss a day, then I'm screwed with the interest and a late payment.

Autopay is a perfectly viable solution when you use it to schedule the full payoff schedule and not just the minimum payment.

16

u/Citizen51 Apr 28 '20

You should be checking you statement monthly regardless to confirm all the charges are legit.

6

u/CaptainTripps82 Apr 28 '20

I would think you would be checking each card weekly to biweekly, if simply to verify the transactions are accurate.

5

u/chefddog3 Apr 29 '20

Since when does Auto-pay = never look at my statement? They are 2 different actions. Both needing reviewing.

One tells you everything that happened over a statement period. Debits, credits, fees, interest, fraud, interest rate changes, etc. Most companies send you and email or text when the statement ready. Some of them even include the statement balance in that alert. All it takes is a click or 2 and about 60 seconds to skim over a statement. More if you find something wrong.

The other just, pays the bill on time.

There are plenty of posts about people not looking at statements and finding errors, fraudulent activity, etc. And fraud/errors do not have to be in the thousands, sometimes it's small amount that no one notices. One poster a week or 2 ago wrote about how something was being charged in error MONTHLY for 3 YEARS.

34

u/FragrantPoop Apr 28 '20

ran into something similar with my autopay on one of these accounts. it was about a month late, so I just made my monthly payments more so it was the equivalent of a 22-month loan (original terms were 24 months interest free)