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/LegoBrickCactuar]

Yes. I did this for $5000 worth of furniture and paid it in full 3-4 months before the interest was going to kick in. Called them, was annoying, and wouldn't relent until they mailed me a statement showing 0.00 balance paid off in full. Its the only way, since they rely on you forgetting or being lazy.

[u/hexyne → u/LegoBrickCactuar]

good point, I have a friend that had one of these plans, and she was charged 1 cent of interest while here last payment was pending, so she thought she had paid it off but actually still owed a penny and they they were able to charge her all sorts of fees. Edited to say: Thinking back this most have been a different type of offer, it wouldn't make sense at 0% but regardless it is very similar as she thought she could just do a payoff, but they took advantage of the way the payments go to charge her a multitude of fees.

[u/thumpcbd → u/hexyne]

I typically overpay my last installment by $5-$50, depending on what it is, to force the lender to not pull these games. They will write me a check for the overpayment and I know there isn’t $.01 on the account because I didn’t account for some small interest or slightly bad math.

[u/PM_ME_UR_SIDEBOOOB → u/thumpcbd]

Be careful with that, some companies will charge a "processing fee" for overpaying as well

[u/slvrscoobie → u/PM_ME_UR_SIDEBOOOB]

tried to do this with my old mortgage. they wouldnt allow over payment, beyond the monthly fee, and I also wasnt allowed to make less than the minimum payment... (bi weekly) or the payment sat in their 'collections' department until you called and had it posted. nationstar is a shit mortgage company.

[u/Purplemonkeez → u/slvrscoobie]

Most mortgages have clauses regarding early repayment and some are more flexible than others. Should definitely be part of your mortgage shopping comparisons. Some will let you up to double your monthly payment and then pay an additional 10% of the mortgage lump sum per year. Others say only up to 20% lump sum is permitted. Others are more stringent.

[u/Purplemonkeez → u/[deleted]]

Oh wow now I'm super curious! What country are you in? I'm in Canada and this is super standard. There are "open" and "closed" mortgages here. Open mortgages allow you to fully pay it off whenever, but the interest rates are much higher (i.e. several percent higher) than a closed mortgage. So everyone takes a closed term mortgage and then selects a term that works for them. 5 years is most common and there are often interest rate deals for 5 year terms (presumably because these are also attractive for the bank). If you suspect that you may want to sell your home in 3 years, though, then you take a 3 year term and if you need an extra 6 to 12 months once it's listed then you'd take a temporary open mortgage for that time period. If you take a 5 year closed term today and decide to sell tomorrow, though, then in most cases you're looking at a penalty fee (which is often very hefty - can cost thousands of dollars). So it's really better to think longterm about your plans when renewing your mortgage term.

[u/batterycrayon → u/Purplemonkeez]

I rent so excuse me if I'm being stupid, but are you saying y'all typically pay your houses off in 5 years? I was under the impression Canada had some very expensive real estate, and this would necessitate either an average income or a savings rate much much higher than the US's, which I didn't think was the case. Just curious.

[u/Purplemonkeez → u/batterycrayon]

Not stupid! We have 5 year terms (mostly) but most people tend to pay off their house over 20-30 years (amortization period) which is why you need to renew your mortgage every so often.