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My current laptop is dying the slow death, specifically the charging circuit in the motherboard is failing; the battery charges in another laptop of the same model. I've considered just running it on the wire forever, but as I often have to go out to job sites where I'm not guaranteed an available plug, that's not completely possible.

To the point though, I need a new laptop; unfortunately, being something I use for work, I can't really go without one forever. I don't have the resources on hands to buy one outright, and don't have time to save up. My question is, are those "no interest if paid off in x months" legitimate? I know it's always a hazard to rely in future income, but I plan on paying it off well within the prescribed period.

Any advice would be greatly appreciated, Thank you.

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You can't buy it outright. You can't take the time to save up.

if the remaining choice is between a card that charges from day one, and a card with this kind of grace period, the grace card is the better choice. Plan wisely, pay it in full before that rate starts to be charged.

One additional note - There are two groups of people, the pay-in-fullers and the balance carriers. I believe that one should pay in full, and never pay interest.

A zero rate offer can be used by the balance carrier to feel great for 12 months, but have even more debt after the rate kicks in.

As a pay-in-full user, I've used the zero rate to throw $20K at the 5.25% mortgage, and planned a refinance to 3.5% just as it ended. a $750 savings (after the tax effect) well worth the bit of effort.

The fees should be in the fine print. My zero rate had a transfer fee, $50 max, which was nothing in comparison to the savings.

  • When you put it like that, it makes perfect sense, but I've been taught to question basically any marketing strategy. Do these kinds of cards come with hidden fees or some tricky way to wring extra $$$ out? Thanks – Sidney Nov 8 '13 at 16:26
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    @sidney balance transfer fee, most commonly. – littleadv Nov 8 '13 at 16:44
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    Thanks for the edit joe. I plan on paying well above the minimum (I usually come out with about $300/mo discretionary, so I can have it knocked out in three months as opposed to their twelve) – Sidney Nov 8 '13 at 16:45
  • @Sidney it's worth noting that the balance transfer fees are typically significantly lower than the amount of interest you avoid paying. As such bouncing a balance around can help accelerate your pay down a bit. It's at best only a medium term solution because you'll eventually run out of banks to open new xfer accounts to. – Dan Neely Nov 8 '13 at 20:19
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    @Sidney You may have already considered it, but many of those types of cards have a higher interest rate after the grace period, and if you don't pay it off in time, it ALL hits at once for the entire original balance for the past year. To avoid this, plan on paying it off well ahead of time before the grace period expires. – Doresoom Nov 8 '13 at 21:16
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It has been reported in consumer media (for example Clark Howard's radio program) that the "no interest for 12 months" contracts could trick you with the terms and the dates on the contract.

Just as an example:

You borrow $1000 on 12/1/2013, same as cash for 12 months. The contract will state the due date very clearly as 12/1/2014. BUT they statements you get will take payment on the 15th of each month.

So you will dutifully pay your statements as they come in, but when you pay the final statement on 12/15/2014, you are actually 14 days late, have violated the terms, and you now owe all the interest that accumulated (and it wasn't a favorable rate).

That doesn't happen all the time. Not all contracts are written that way. But you better read your agreement.

Check for:

  • The due date
  • The penalty dates
  • How you must pay
  • Where you must pay
  • Are there prepayment penalties?

Some companies use the same as cash deal because they want to move product. Some do it because they want to trick you with financing. Bottom line is, you better read the contract.

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    For this reason it's better to try and pay off the debt before the final month. I had some emergency car repairs and was offered a 6 months no interest deal; I paid it back in 3 months and walked away better off. – Yamikuronue Nov 8 '13 at 18:57
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I too am a full-monthly-statement-balance payer and I received a balance transfer offer from my credit-card company. This one was quite different from many others that I have read about on this forum.

I could do a balance transfer for any amount up to $X from another credit card, or use the enclosed "checks" to pay some other (non-credit-card) bills, and I would not have to pay any interest for 12 months on the amount thus borrowed. But,

  • There would be a 2% service charge on the amount I was borrowing. This amount would be billed on the next monthly statement, and it would have to be paid in full by the due date of that month's payment, that is, within the 25-day grace period allowed for payment of monthly statements. Else, interest would start being charged on the unpaid part of the service charge at the usual humongous rate of H% per month.

  • If I had not paid the previous month's balance in full, I would be charged interest at H% per month on the service charge starting from Day One; no free ride till the due date of the next month's statement. Of course, the balance carried over from last month would also be charged interest at H%.

  • If I had paid last month's bill in full, but there were any other charges (purchases) during the current month, then unless the entire amount due, this month's purchases plus service charge and that "interest-free-for-twelve-months loan" balance was paid off within the 25-day grace period, my purchases would be deemed unpaid and would start being charged interest.

In short, the only way to avoid paying interest on the amount borrowed was to start with a card showing a $0 balance due on the previous month's statement, not make any charges on that card for a whole year, and pay off that 2% service charge within the grace period. It might also have required that one-twelfth of that interest-free loan be repaid each month, but I had stopped reading the offer at this point and filed it in the round circular file.

In short, while @JoeTaxpayer's tale of how "As a pay-in-full user, I've used the zero rate to throw $20K at the 5.25% mortgage" is undoubtedly how things worked once, it is not at all clear that they still work that way. At least, they don't work that way for me. Heck, once upon a time, for a period of about 3 months, you could earn 1.5% interest per month from the credit card company by overpaying your credit card bill considerably. Their computers then just "added on" 1.5% interest by multiplying your credit balance -$X by 1.015 and so you got 1.5% per month interest from the credit card company. The credit card agreements (and the software!) got changed in a hurry, and nowdays all credit-card agreements state in the fine print that if you overpay your bill, you don't earn any interest on the overpayment.

  • +1 the fine print can be different for any new deal. – JoeTaxpayer Nov 9 '13 at 0:19
  • In Australia, when we get offered zero interest periods (whether 6 months or 12 months) on transfers we do not get charged any fees. The only requirements to get the zero interest for the full period is that the minimum monthly payment must be paid by the due date each month and the outstanding amount be fully paid off before the end of the free period. The banks and other credit card providers make these offers because the majority of people don't pay the full amount by the end of the free period so end up paying interest (as Joe says). – Victor Nov 10 '13 at 20:40
  • @Victor Banks and credit card companies in the US also make offers of no-fee balance transfers and I too get such offers by e-mail and by post (US Mail for US readers) but when I apply by phone or reply by e-mail, these offers promptly change to 2% or 3% transfer fee offers because I am presumably marked down as a known dead-beat who does his utmost to avoid paying credit-card interest. – Dilip Sarwate Nov 11 '13 at 0:01
  • @DilipSarwate - I have taken out 3 or 4 of these offers over the years with different providers and there has been no transfer fee each time. I have had many other offers with no transfer fees either. The first time I heard about these balance transfer fees for customers in the USA was actually on this site. A bit better regulations on the banks here I suppose. – Victor Nov 11 '13 at 2:12
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No, because of the balance transfer fees, which could be 4%. Unless of course you get a deal for 12 months of no payment, and you pay it back in 12 months, in which case a 4% annual interest rate is much less than a loan! At that point you are gambling that you will be responsible with the payments, and the card company is taking the opposite bet.

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    Is he transferring anything or just charging with a zero rate offer? – JoeTaxpayer Nov 8 '13 at 22:04
  • If he's doing a balance transfer, there are cards that offer a balance transfer fee-free with no interest for x month in an effort to encourage you to switch to their company – Yamikuronue Nov 10 '13 at 1:50

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