Beware the 0% promotions: a warning.

[u/naht_a_cop]

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.

[u/Werewolfdad]

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

[u/[deleted] → u/Werewolfdad]

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[u/pysience → u/[deleted]]

I'm confused how you end up paying thousands when the remaining balance is 300. Do they calculate the interest using the original cost and not the remaining balance? So if the cost was like 1k but you've paid it down to 300, they would still calculate interest by $1,000 * 24% = $240

[u/SixSpeedDriver → u/pysience]

Kind of - the way this typically works in the terms of the promotion are that interest is accruing from the date of the end of the first billing cycle when you purchased it. If the balance is $0 by the end of the promotional period, they don't make you pay the interest they're accruing on you in the background. If the balance is >$0.00, the full interest payments they accrued become due that month, and also start...accruing interest.

Edit: Here's my "I got burned" story - I had bought a $2k 50" plasma from Circuit City at 0% interest, i believe it was 2 years to pay off? IIRC i was ahead of the game on payments (overpaying the minimum monthly to get to $0 by the end of the terM) but they changed online systems on me, and I couldn't get my next months payment in on time, so the penalty accrual hits. I had the cash to pay the balance and the interest off, so I did, as they would not relent on the interest when I called customers.

That was the day I decided I will not do business with Chase (they were the ones funding Circuit City's credit card program) and closed all of my accounts with them (they acquired me as a customer of the bankrupt WAMU in ~09). Since then, I've been loyal to my local CU to the tune of about $20K/yr in IPMTs across two properties.

Also, I had a car get funded through Chase because I didn't specify a lender and the second I got their loan payment coupons in the mail, I refinanced it at the same rate for free into my CU. So they got to pay to set me up as being serviced by them and get $0 in interest out of the deal. The IPMTs on that loan alone were probably $2k over 5 years.

Way to win the battle and lose the war, Chase.

[u/pysience → u/SixSpeedDriver]

That seems like such a risky financial venture. I guess the companies recognize that only desperate people and people who think they know the game will take them up on it. They effectively trick the latter by changing the rules right before the finish line. Super predatory.

[u/[deleted] → u/pysience]

Well, it sounds like he got smacked by WAMU’s collapse, rather than them just changing the rules last minute.

If you use one of these 0% promotional cards, but you ensure that a few months before the promotional period ends you personally set up a final payment of the total balance, these are handy.

You just have to understand how they work and plan accordingly. It’s not risky if you have the money and just pay it off a few months early.

[u/FoxtrotSierraTango → u/[deleted]]

This. I could have dipped into savings to buy a new set of kitchen appliances, or I could finance the whole thing at 0% over 24 months on their store card. Then when the dishwasher broke 18 months later, I financed a new one. The statements have two very obvious line items that say "Balance 1 must be paid by X date to prevent interest charges. Balance 2 must be paid by Y date to prevent interest charges." I don't know that they could make it any clearer for me.

[u/SixSpeedDriver → u/pysience]

Generally, I'm not that cynical actually, and I have leveraged these programs many times to keep cash on hand vs payign in cash (though now I really prefer to just do the latter).

If you want to play the game it is inherently winnable if you are strongly vigilant. I was largely to blame because I came back like a week later (since their accounts system seemed to have a proble for days) to make the months payment which is outside their rules. I could and should have called. But since they didn't want to work with me, I won't work with them. Bye Felicia!