Pay off credit card to avoid back interest?

[edro]

I have a BankOne (Chase) card that said No Interest for one year (got it Dec.1, '04).

If my balance the day of Dec.1, '05 is $1, will I have to pay all the back interest? To avoid all the back interest, does the balance have to be zero?

After one year, the interest is like 10%, which is still much much better than any other credit card I have ever had.

How does this work on 90 days same as cash? No interest for 3 years? No payment for a year? Those type of deals?

 

[mzkhadir]

balance have to be zero. You basically have to pay it off within that time to get no interest.

 

[CTrain]

Yeah, if you don't pay the entire balance off, they will charge you the accrued interest from the beginning.

 

[edro]

Originally posted by: CTrain
Yeah, if you don't pay the entire balance off, they will charge you the accrued interest from the beginning.

Eek...

What if you charged say $1000 on it, paid it off, didn't use it for 11 months, then on Nov.30, '05 you charged $1 on it? Would you have to pay the interest on the $1000?

 

[kranky]

I'm going to disagree and say that if you have a balance outstanding when the 0% offer expires, you'll only owe interest on that month's balance, NOT for the entire time you had the card. However, the only way to know for sure is to call your bank or, better yet, read the Terms and Conditions that you got when you signed up.

Now if you get a "no interest for 3 years" or similar offer from a retailer, you may have to pay all the back interest if not paid in full by the due date.

It boils down to carefully reading the terms of each offer. Don't assume anything.

 

[shortylickens]

You may have heard this before but:
Any company offering these super good deals usually jacks up their interest at the end of the free period.
Go with the group not offering any gimmicks. They usually have good service with reasonable interest rates.

Like my Citibank Platinum. Nothing special. Just an average of 5% interest over the last 4 years, and service much better than most of the other banks.

 

[Eli]

:Q:Q:Q

I've never heard of this.

/runs off to check newest CC agreements

 

[CTrain]

Originally posted by: edro13

Originally posted by: CTrain
Yeah, if you don't pay the entire balance off, they will charge you the accrued interest from the beginning.

Eek...

What if you charged say $1000 on it, paid it off, didn't use it for 11 months, then on Nov.30, '05 you charged $1 on it? Would you have to pay the interest on the $1000?

It depends on the CC but most CC do this..

 

[RossMAN]

Originally posted by: kranky
It boils down to carefully reading the terms of each offer. Don't assume anything.

This is a good point and very very important.

I recently helped someone from another forum because they wanted to SUE their credit card company for not honoring their 0% APR balance transfer promo. They e-mailed me a scanned copy of the terms and conditions. It clearly spelled out you must make 3 purchases within the first 30 days to qualify for the offer. Guess what? They read everything BUT the tiny print on the back of the offer. So now they're paying about 11.99% on $20,000 balance ouch!

Also some retailers (a local furniture store in particular) do offer true 0% for up to 36 months. So let's say you buy $5,000 furniture today with 0% for 3 years and make the minimum monthly payment of $35/mo. After 3 years there will be NO accrued interest from the past 3 years, it starts the following day. Those types of deals while rare - do exist.

 

[Kelemvor]

You do not normally have to pay it off. If it's a store card like Best Buy wher eyou get 12 months financing, then it has to be completely paid off by the end date. If it's a normal credit card offer, then you do not.

I've gone through a number of credit cards when one has it's deal end and I get somethign in the mail for 0% for XX months on Balance Transfers. I jsut transfer the balance and am good to go. After the year you then pay interested as you normally woudl on whatever balance you have.

 

[GrouchyLadybug]

Credit Cards: Back interest is NOT charged when a 0% offer expires. I have experience with this with two of my credit cards from two different companies (Discover and Providian).

Retailers (like furniture): I can tell you my experience. Ashley Furniture offered us 0% interest and no payments for a year. At the end of that year, they DID charge back interest on the balance (at 21.99%, ouch!). We got a statement in the mail each month saying how much interest had accrued thus far, and a payment coupon in case we wanted to make payments (although we were not obligated to). Well of course, we paid off the balance in 11 months before the interest kicked in.