did you ever fall for 0%?

 

I'm the type who has to touch the stove and get burned.

Yesterday I made a payment of over $9k to pay off a credit card debt once and for all.

It's bittersweet.

When my son was born I got a 0% for 18 mos credit card--that was over 7 years ago.

The idea was whatever the spend was every month, I was going to put that much into savings. After 18 mos., pay it off.

As luck would have it, 18 mos went by, and I had a $14k balance, and I had not saved as I said above.

What I just paid off was 12 mos @0% with no fee. No fee is the exception, lately it has cost between 2-3% to do balance transfers. When I get offers in the mail today, I just rip them up.

While it's painful to see that much leave savings to pay a debt that's basically from over 5 years ago, it does feel like a monkey off my back.

I will never fall for a 0% credit card again. Hope nobody else does unless they have a lot of discipline.

Now 0% loans where it's a fixed payment? I'd be ok with that. Because that is a loan where the principal is divided by 36 or 48 or 60, etc. But a credit card requires only 1% payment per month. Why do we have to learn the hard way, even as adults? Because we're human!

And don't get me wrong I use credit cards to earn cash rewards, just that these must be paid in full every month. We have a permanent 5% gas cash rewards, and 5% groceries. My buddy calls this spend to save, but I keep telling him no it isn't--these are necessities earning a 5% cash reward.

Credit cards

johnnatash4 wrote:

Did You Ever Fall For 0%?...

And don't get me wrong I use credit cards to earn cash rewards, just that these must be paid in full every month. We have a permanent 5% gas cash rewards, and 5% groceries. My buddy calls this spend to save, but I keep telling him no it isn't--these are necessities earning a 5% cash reward.

No to question 1.

Rewards: I have to keep a sticky note in my wallet that I revise at least 4X a year for rewards. I have a 2% everything/always card, a 3% always gas/restaurant card, and a 1% always but with rotating 5% rewards card. More recently it's become even more confusing as one of my non-rotating offer cards occasionally offers a 1-2 month at a time 5% discount on certain purchases. It keeps me mentally on my toes. I think part of the rotating offers are the credit card companies checking to see that you're monitoring emailed offers and activating the offer online

Never

I never tried using a 0% credit card.

The one I use most, offers points toward hotel stays. I travel a lot and rarely have to pay for lodging.

I also take advantage of 0% auto loans. The brand that offers 0% for the longest time frame gets the sale.

my point

When I was a sophomore in college, Citi got me at the lecture center. AMEX got me next.

Citi I maxed out in a matter of 6 mos. AMEX back then the balance had to be paid in full so that didn't get maxed out, but they charged a fee.

So after all those years, flash forward to 2014. I did not max out the 0% for 18 mos credit card because the credit extended was almost 30k. but I did manage to get up to 14k. That is bad news. From late 2016 to yesterday, I'd pay a little but move the balance to another 0%, most of the time it was 2% to do so for a year. The last one was $0 (NavyFed), so I took it. It expired and this time I said enough is enough, pay it off and never do this again.

Again I am ok with 0% loans where the principal is divided by the number of payments. But 0% credit cards, never ever again--they only require 1% of the balance to be paid each month. At that rate, the debt will never be repayed (well sure in 100 months which is over 8 years--the 0% is usually only for 12 mos, sometimes 18).

At least with gas we have a permanent 5% so no need to rotate and see which one has it each quarter (seems to be grandfathered and no longer be offered). We have groceries for a year at 5%....but we do the rotating categories too like on warehouse clubs and home center stores, and PayPal...

They are all 0% if you pay

They are all 0% if you pay the balance every month.

--
Frank DriveSmart55 37.322760, -79.511267

credit card debt.

johnnatash4 wrote:

I'm the type who has to touch the stove and get burned.

Yesterday I made a payment of over $9k to pay off a credit card debt once and for all.

It's bittersweet.

Congratulations on eliminating your credit card debt John. Credit cards are wonderful tools but are also traps that you can easily get caught up in. I have always tried to pay the balance every month, but sometimes an emergency comes up and you can soon be on a slippery slope.

--
Alan - Android Auto, DriveLuxe 51LMT-S, DriveLuxe 50LMTHD, Nuvi 3597LMTHD, Oregon 550T, Nuvi 855, Nuvi 755T, Lowrance Endura Sierra, Bosch Nyon

CC interest used to be deductible..

Back in the late 1960's/early 1970's the interest on credit cards was allowed as a deduction on Federal taxes. In doing my taxes one year I was shocked at how much I had paid in interest. My wife and I resolved to wipe out all credit card balances in a year or two, which we did accomplish.

I have a nephew who runs about $5000 balance on his credit card and constantly pays the minimum or very slightly more. Maybe if interest was again allowed as a deduction, it would shock the youth of America.

--
John from PA

Oh yeah,

I will use 0% credit card offers. I had my financial advisor tell me once that you are crazy not to use someone else’s money. The trick is to pay it back on time. For example; if I get one of these offers and I am planning on buying something, I will avail myself of the offer. But if I buy something for $600.00 and the interest free term is 6 months, I will pay $100.00 a month for 6 months. Conversely, if it’s for 12 months, I will only pay $50.00 a month. I will never pay it off early, but I also never run past the allotted time. This is good money management if you have the willpower to stick to the time schedule.

--
It is impossible to rightly govern a nation without God and the Bible. ----George Washington

I Prefer No Interest On Credit Cards

Since I was divorced 40 years ago this month, I haven't paid a cent of credit card interest since I shortly got them all paid off. Prior to that I was getting ripped with high interest payments.

In recent years I use primarily one credit card that pay me a straight 2% plus a second card that pays additional rebate in certain categories as restaurants, 3%, and gasoline, 4%. Credit cards that pay rebates in rolling categories that cycle every few months are too complicated to keep track of and are of no interest to me.

Credit cards for 25+ years.

Credit cards for 25+ years. A number of 0% offers. As mentioned you need to stay on top of it and pay it off before it balloons. I use quicken to manage my finances. Log in periodically to all account to keep track of.

Someone I dated way back didn't understand the concept of credit cards. "It's someone else's money". No it's not. YOU are still responsible for paying it off.

Same here

mcginkleschmidt wrote:

Since I was divorced 40 years ago this month, I haven't paid a cent of credit card interest since I shortly got them all paid off. Prior to that I was getting ripped with high interest payments. ...

It has been about 40 years for me also. After paying off my marriage credit card debt I have paid credit card interest only once in 40 years. I won't charge anything unless I can pay the debt in full when due.
Mark

??

This discussion on credit card interest raises the question of why credit card companies are allowed to charge an average of 18% when the prime rate sits at 3.25%?

Where is the federal regulation? Right now, it's left up to individual state usury laws which vary wildly.

An interesting article:

https://www.natlbankruptcy.com/high-interest-credit-cards/

right now

bdhsfz6 wrote:

This discussion on credit card interest raises the question of why credit card companies are allowed to charge an average of 18% when the prime rate sits at 3.25%?

Where is the federal regulation? Right now, it's left up to individual state usury laws which vary wildly.

An interesting article:

https://www.natlbankruptcy.com/high-interest-credit-cards/

Right now 0% only sounds good because it's the number 0, i.e. nothing.

But I only get 0.005 or .5% in my online savings.

When I got 2.5% in my online savings, there was still 0%, so the spread was ok--the idea of using someone else's money.

Good question, because we could argue, shouldn't people be protected from bad deals? If a CC co wanted to offer 18%, should regulations prevent them from being able to do so? I bet they argue, but "we're helping people who don't qualify for good rates..."

I always feel this way. Say one person reads what I typed and says, I ripped up that 0% offer. That would be a good thing! And I don't mean to never use credit, not at all. Or, if you have superior discipline, you can in fact run up a 0% balance, but put the money into your own account until 12 to 18 mos. later when the rate goes to normal, you pay it...

not in my day

johnnatash4 wrote:

When I was a sophomore in college, Citi got me at the lecture center. AMEX got me next.

Ah, I'm a bit older than you. When I was in college, we not only could not get credit cards, but hardly any bank would actually give us an account that would let us write checks. I lived in the Back Bay district of Boston, and in my sophomore year word got around that one bank was accepting student accounts and their office got mobbed. Even graduating, getting a degree, and a job was not enough. I finally got a credit card when I'd been out of graduate school and working for Intel in California for a year or two. Cash was very much a real part of life for me back then.

On the actual thread topic--I've never intentionally failed to pay my credit card accounts timely enough not to incur any interest. Only had about three accidents, which went away when I got the automatic payments working on all of them. I don't like debt in general, and double-plus don't want credit card debt.

--
personal GPS user since 1992

score

bdhsfz6 wrote:

This discussion on credit card interest raises the question of why credit card companies are allowed to charge an average of 18% when the prime rate sits at 3.25%?

Where is the federal regulation? Right now, it's left up to individual state usury laws which vary wildly.

An interesting article:

https://www.natlbankruptcy.com/high-interest-credit-cards/

In addition to this, and I've seen offers a lot higher than the 18% you mention ...

I wonder how they figure out credit scores. I have three cards, and if I pay all three off each month my score goes down by a couple points, but if I keep a little on each one, (under $50) the score goes back up. Two are credit cards from the same company and have relatively small "max amount" that could be used. The third is from a credit union with a very large "max amount" that could be used.

My score for the two is 815 and the CU is 826, they're all supposedly based on FICO reports so why such a big difference.

Too many things are tied to your score these days and although my scores are great, I'd still like to know how they come about.

--
. 2 Garmin DriveSmart 61 LMT-S, Nuvi 2689, 2 Nuvi 2460, Zumo 550, Zumo 450, Uniden R3 radar detector with GPS built in, includes RLC info. Uconnect 430N Garmin based, built into my Jeep. .

banking logic

archae86 wrote:
johnnatash4 wrote:

When I was a sophomore in college, Citi got me at the lecture center. AMEX got me next.

Ah, I'm a bit older than you. When I was in college, we not only could not get credit cards, but hardly any bank would actually give us an account that would let us write checks. I lived in the Back Bay district of Boston, and in my sophomore year word got around that one bank was accepting student accounts and their office got mobbed. Even graduating, getting a degree, and a job was not enough. I finally got a credit card when I'd been out of graduate school and working for Intel in California for a year or two. Cash was very much a real part of life for me back then.

On the actual thread topic--I've never intentionally failed to pay my credit card accounts timely enough not to incur any interest. Only had about three accidents, which went away when I got the automatic payments working on all of them. I don't like debt in general, and double-plus don't want credit card debt.

Old banking logic: The only way to obtain a loan was to prove to the bank that you didn't need it.

New banking logic: Demonstrating the mere possibility of repaying a loan is unimportant.

I Was Told...

soberbyker wrote:
bdhsfz6 wrote:

This discussion on credit card interest raises the question of why credit card companies are allowed to charge an average of 18% when the prime rate sits at 3.25%?

Where is the federal regulation? Right now, it's left up to individual state usury laws which vary wildly.

An interesting article:

https://www.natlbankruptcy.com/high-interest-credit-cards/

In addition to this, and I've seen offers a lot higher than the 18% you mention ...

I wonder how they figure out credit scores. I have three cards, and if I pay all three off each month my score goes down by a couple points, but if I keep a little on each one, (under $50) the score goes back up. Two are credit cards from the same company and have relatively small "max amount" that could be used. The third is from a credit union with a very large "max amount" that could be used.

My score for the two is 815 and the CU is 826, they're all supposedly based on FICO reports so why such a big difference.

Too many things are tied to your score these days and although my scores are great, I'd still like to know how they come about.

I usually make major purchases on credit when 0% interest is offered. Whenever I pay off one of these 0% loans, my credit score drops a few points. I questioned the folks at FICO about this and was told lenders want to see a history of regular payments. When a loan is paid off, these payments stop, hence the drop in credit score. The same holds true when you cancel a credit card.

Paying off a credit card balance every month can also have a negative effect on your CS. Lenders WANT you to pay interest and you're a more attractive potential customer when you do.

It isn't so much your ability to pay off your debt but more that you have debt (within limits) and pay it off on a regular basis.

These factors, along with a host of others, go into a very complex formula used to calculate credit scores.

I keep in touch with my old college roommate who doesn't believe in credit cards and pays for everything using cash or check. He is quite wealthy with no debt at all and his credit score is ridiculously low. No credit history can hurt you more than a poor one.

It's sad to say but lenders make more from the poor than they do from the rich.

my

bdhsfz6 wrote:
soberbyker wrote:
bdhsfz6 wrote:

This discussion on credit card interest raises the question of why credit card companies are allowed to charge an average of 18% when the prime rate sits at 3.25%?

Where is the federal regulation? Right now, it's left up to individual state usury laws which vary wildly.

An interesting article:

https://www.natlbankruptcy.com/high-interest-credit-cards/

In addition to this, and I've seen offers a lot higher than the 18% you mention ...

I wonder how they figure out credit scores. I have three cards, and if I pay all three off each month my score goes down by a couple points, but if I keep a little on each one, (under $50) the score goes back up. Two are credit cards from the same company and have relatively small "max amount" that could be used. The third is from a credit union with a very large "max amount" that could be used.

My score for the two is 815 and the CU is 826, they're all supposedly based on FICO reports so why such a big difference.

Too many things are tied to your score these days and although my scores are great, I'd still like to know how they come about.

I usually make major purchases on credit when 0% interest is offered. Whenever I pay off one of these 0% loans, my credit score drops a few points. I questioned the folks at FICO about this and was told lenders want to see a history of regular payments. When a loan is paid off, these payments stop, hence the drop in credit score. The same holds true when you cancel a credit card.

Paying off a credit card balance every month can also have a negative effect on your CS. Lenders WANT you to pay interest and you're a more attractive potential customer when you do.

It isn't so much your ability to pay off your debt but more that you have debt (within limits) and pay it off on a regular basis.

These factors, along with a host of others, go into a very complex formula used to calculate credit scores.

I keep in touch with my old college roommate who doesn't believe in credit cards and pays for everything using cash or check. He is quite wealthy with no debt at all and his credit score is ridiculously low. No credit history can hurt you more than a poor one.

It's sad to say but lenders make more from the poor than they do from the rich.

My wife has never had a loan, not ever. She applies for a credit card, 24k credit line.

Not to mention, she was not working from 2014-2019.

FICO 9 Experian 850

One of those interim years I moved $12k of the 0% to her, because she had the $0 fee offer, I didn't. Her FICO dropped like 35....but once paid off it went back up.

I would have to say that paying off from my experience does not lower the FICO, but taking on unsecured debt does. At least from my experience. Mine is no longer 850 as it once was, but wifey's is.

I like Experian because it seems to be the lowest when compared to Equifax and Trans Union, from our perspective.

It is comical to not be working and get extended massive lines.

Thanks for the replies

Thanks for the replies

johnnatash4 wrote:

I usually make major purchases on credit when 0% interest is offered. Whenever I pay off one of these 0% loans, my credit score drops a few points. I questioned the folks at FICO about this and was told lenders want to see a history of regular payments. When a loan is paid off, these payments stop, hence the drop in credit score. The same holds true when you cancel a credit card.

Paying off a credit card balance every month can also have a negative effect on your CS. Lenders WANT you to pay interest and you're a more attractive potential customer when you do.

It isn't so much your ability to pay off your debt but more that you have debt (within limits) and pay it off on a regular basis.

These factors, along with a host of others, go into a very complex formula used to calculate credit scores.

I keep in touch with my old college roommate who doesn't believe in credit cards and pays for everything using cash or check. He is quite wealthy with no debt at all and his credit score is ridiculously low. No credit history can hurt you more than a poor one.

It's sad to say but lenders make more from the poor than they do from the rich.

johnnatash4 wrote:

My wife has never had a loan, not ever. She applies for a credit card, 24k credit line.

Not to mention, she was not working from 2014-2019.

FICO 9 Experian 850

One of those interim years I moved $12k of the 0% to her, because she had the $0 fee offer, I didn't. Her FICO dropped like 35....but once paid off it went back up.

I would have to say that paying off from my experience does not lower the FICO, but taking on unsecured debt does. At least from my experience. Mine is no longer 850 as it once was, but wifey's is.

I like Experian because it seems to be the lowest when compared to Equifax and Trans Union, from our perspective.

It is comical to not be working and get extended massive lines.

--
. 2 Garmin DriveSmart 61 LMT-S, Nuvi 2689, 2 Nuvi 2460, Zumo 550, Zumo 450, Uniden R3 radar detector with GPS built in, includes RLC info. Uconnect 430N Garmin based, built into my Jeep. .