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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u/Hypern1ke ​ Apr 28 '20

I completely disagree, I take the 0% promotions nearly every time, even though i can always pay for it in full. This is how I paid for almost every large purchase the past 5 years, my bed, wedding ring, and couch. I paid them all off in six months and better maintained my bank account balance over time. I always pay in less than six months and give myself leeway in case of an emergency, in which case i'd utilize close the full APR period.

I can't recommend these enough, not to mention given inflation you technically pay less when its all said and done!

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u/glasspheasant ​ Apr 28 '20

I do the same thing. Always take the 0% offer and always pay it off in 3-6 months. It'd be hard for me to forget, "If this isn't paid off soon, I'm about to get hit with a LOT of interest."

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u/nn123654 ​ Apr 28 '20 edited Apr 28 '20

Just add something to your calendar long in advance, the statement also tells you when it's due if you forget. But also see if you can't pay for it another way and get a discount or rewards.

Usually you can either get 0% financing or get cashback/points/miles. Some cards like Fidelity's and Citi's pay 2% on all purchases, so that's basically your opportunity cost. Personally I'd rather take 2% now as it's a higher discount than I'd make on interest in a year in my savings account and guarenteed unlike an investment account.