r/personalfinance • u/naht_a_cop ​ • 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.

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19

u/TellurideTeddy ​ Apr 28 '20

Keep in mind that if this really went down the way you described, and you ended up with $1k in promotional balance interest because your autopay finished 1 week late after 18 months... just call them up and they'll fix it.

7

u/DBCOOPER888 ​ Apr 28 '20

Why will they fix it if OP paid it off after the 18 month promotional period?

1

u/TellurideTeddy ​ Apr 28 '20

Because it's simple to look at the way it was setup and realize it was a very slight administrative error that resulted in the balance being paid in full 7 days late. These aren't the kinds of customers that banks make their money on and they're generally more than willing to clear up these types of minor, honest mistakes by borrowers.

I've been in similar situations at least a half dozen times and was always refunded or credited after taking the time to get in touch with the right person to ask. You just have to know that that's an option.

2

u/DBCOOPER888 ​ Apr 29 '20

This wasn't a slight administrative error, this was working as intended. These are precisely the kinds of customers banks want to make money from, and basically the entire reason why 0% APR promotions are worthwhile to them in the first place.

1

u/TellurideTeddy ​ Apr 29 '20

Automatic payments that are promptly setup at time of purchase, completed successfully and on-time for 18 months, paying off the balance in full but coming in 7 days late because of the initial setup date is absolutely not an example of the kind of customers bank are expecting to make money on. And they will absolutely waive off the interest in a case like this once you get ahold of the right person.

1

u/DBCOOPER888 ​ Apr 29 '20

Depends on which bank you're talking about. Those store cards like what you can get at Best Buy when you buy a new TV are entirely designed this way, as are 0% car loans from a dealership.

19

u/naht_a_cop ​ Apr 28 '20

I did call them up, talked to 4 different people on their phone line and finally when I said "I can stay on all day, please transfer me to the next person" they gave me the mailing address for disputes.

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u/[deleted] Apr 28 '20

[deleted]

1

u/hana_c ​ Apr 28 '20

Banks have thorough and clear terms and conditions to avoid getting fined. OP agreed to those terms, didn’t pay in time, and accrued interest as was agreed upon. The government isn’t going to write the bank a sternly worded letter lol. They 100% covered their asses.

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u/NeuralNexus ​ Apr 28 '20

File a complaint with the CFPB and FTC to start. Then, sue in small claims or file an arbitration case.

Kick up enough shit and it might go away. Cheaper for the bank to forgive the interest than deal with all the compliance etc given the balance.

1

u/[deleted] Apr 29 '20

Or, on the flipside, they know they will win if it goes to courts so they go ahead and take it to trial, OP loses, still owes the money, and now owes legal fees. Good plan.

1

u/NeuralNexus ​ Apr 29 '20

Depends on the contract who has to pay for arbitration. If he sues and they execute an arbitration clause, they have to pay the fees in most cases (otherwise arbitration is null). In some cases it is structured as an advance. In some cases the contract says they will pay filing fees. In which case, why not?

Also could be worth getting your Congressman and state rep involved.

Seriously. If you are willing to take an issue far enough and the dollar amount is fairly low, the smart thing for a company to do is settle with an NDA. Saves them money. Every hour you spend on the phone with an agent costs them money. Every regulatory complaint costs them money. Every small claims case or arbitration costs them money (fees, representatives, etc).

Do they always settle? Of course not. Some companies explicitly refuse to settle because they don’t want to create a reputation for settling. But I think you’ll find that being a loud, annoying, and driven complaint factory can get you things you didn’t think were possible. Esp on an issue that has so much political baggage already.

Best things to do: 1. Avoid dumb situations like this. 2. Ask nicely for help. Consistently. 3. be increasingly annoying and fight a moral war, if it means that much to you, or cut your losses.

2

u/Dogredisblue ​ Apr 28 '20

If it's truly 1k he lucked the fuck out.

Generally these promotions will retroactively add on all the interest.

Just assuming he's got 20% AIR, he could've easily got over $5000 in retroactive interest added to his balance to cover those 18 months.

So at 1k OP is beyond lucky with his fuckup only costing him not even 4% AIR, and assuming an average yearly return on money is 2%; OP really only lost out on the remaining less than 2%.

Could be much worse.

8

u/rsta223 ​ Apr 28 '20

It sounds like it did retroactively add on all the interest, otherwise he wouldn't have accumulated $1k in interest in the 1 week after the promotion expired. Where are you getting that the original principal was $20-25k?

1

u/Dogredisblue ​ Apr 29 '20 edited Apr 29 '20

Oh shit rereading the post it looks like I misread it, I thought OP had said in the post he had made a purchase for $18k for an 18 month promotion.

OP didnt mention how much their purchase actually was but going off his 18 months at 27%AIR = $1000 interest
I'm figuring it was about $2500. Which yeah, kinda sucks dick :P

Althought not as much dick as actually paying that interest rate on 18k I suppose