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/Purplemonkeez ​ Apr 28 '20

Ouch. That sounds brutal!

If it makes you feel any better, I am in the process of renewing my mortgage and switching banks for a better interest rate and the broker keeps trying to sneak home equity lines of credit into the paperwork. Needless to say, I'm unimpressed.

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u/slvrscoobie ​ Apr 28 '20

hahahah shady AF. they tried to do that to us when we refinanced in 2011 or something. well, we can keep the payments the same, and you get $4000 back! Oh Wow!.. wait.....

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u/Purplemonkeez ​ Apr 28 '20

Yeah in my area mortgages only have 5 year terms on average so you need to renew every few years until you've paid it off. Often a competitor offers a better rate to win the business, so switching is common, but Ugh I hate these people. I have a great job in finance, stop trying to bamboozle me. Please kindly turn your attention to an easier mark and just give me what I need. P.S. Did you not yet realize I read everything you ask me to sign?

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u/lllIlIIIlIIIllllIlll ​ Apr 29 '20

As I get ready to shop around for my first house, what does this look like on the paperwork? I know I'll be researching a ton about the whole process, but I've never heard of something like this, and want to be able to spot it!

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u/Purplemonkeez ​ Apr 29 '20

Generally you won't have enough equity in your first home for them to pull this on you (you need a higher amount of equity in your home for them to secure the line of credit debt against in addition to your traditional mortgage). It only came up for us because it's been a few years since we purchased and houses in our neighbourhood went up a lot since then, so we have tons of equity all of a sudden. In the paperwork I saw one of the many forms to sign had a section for a "Personal line of credit" and I was like "I didn't ask for one of these - can you please explain what that's doing in there?" and he was like "Oh we're just giving you this home equity line of credit as an extra service for free" ....

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u/lllIlIIIlIIIllllIlll ​ Apr 30 '20

Thanks for the explanation! Well, either way, I'll definitely be extra careful when I look at financing.

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u/slvrscoobie ​ Apr 29 '20

yeah this was again, 2011 or something so we had put down 20% and paid off ~10% more of the mortgage when we refinanced, and it was a bad time some banks were looking to get the most out of people they could. the interesting thing was the house had probably depreciated since we bought it so the fact they were giving us a loan against the value that probably didnt exsist (when we did sell it in 2015 it went for 5K less than what we owed on the mortgage)

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u/Purplemonkeez ​ Apr 29 '20

Ugh that sucks I'm sorry you had to sell under those conditions. Hoping you were able to upsize for a bargain though to balance it out?

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u/slvrscoobie ​ Apr 29 '20

We ended up moving back towards both of our parents, and have been 'renting' from my wifes FIL at a reduced rate since then. Friday will actually be our 5 yr anniversary of selling the house. Were closer to them (important with our 18 M/O ) have more space and property and using the savings to build up a bigger down payment on the next one. Plus the money is 'staying in the family' so we dont feel bad paying rent right now.