ELI5 0% APR credit card introductory offers (for a story)

[joy_of_cooking]

Could someone familiar with those 0% APR introductory offers reality-check the following scenario?

I'm writing a story involving a disagreement between an excessively cautious guy and his more adventurous girlfriend about how to pay for an expensive purchase he's been wanting. Let's say he's ~1k USD short and it'll take him ten more months to save up that amount.

She points out that he's got one of those spam letters offering him a credit card with 0% interest for 18 months. He could put it on the card, pay it off with plenty of time to spare, and not even pay interest.

He's concerned about failing to repay and getting hit with the 27% APR. Or, worse, giving in to temptation, running up a balance, and really screwing himself over. Also, he just has no experience with consumer debt; he's a second-generation immigrant and his parents did everything in cash.

Does this seem like a plausible setup? Do both sides seem reasonable? I don't want her to seem reckless for suggesting it, nor do I want him to seem ridiculous for having concerns.

 

[intim8]

Yeah, both are reasonable, though his concerns are more psychological than from anything inherent in the offer (though I would be very wary of fine print on that, even assuming it is a legit credit card company.)

Also know that if he does make further purchases, the initial offer amount with the higher future interest rate goes to the back of the line for repayment. He will never pay a cent back on that initial loan until he pays all subsequent charges down to zero. It is a common and very insidious trap.

I'm with him unless the purchase is really vital, and not just some toy or luxury.

 

[Bazzle]

As long as it's paid off in full before the 18 months is up, then it's 0%

 

[Bazzle]

Just also watch out...
These card introductions are normally on balance transfers- not new spending?
If you have 1000's with one credit card, you can transfer the debt to another and get the 0%...rather than spend new money to get 0%.
So with your story, make sure its the right deal

 

[astuffedshirt_perv]

Could someone familiar with those 0% APR ... offering him a credit card with 0% interest for 18 months. He could put it on the card, pay it off with plenty of time to spare, and not even pay interest.

when i was young and cash strapped, I did this several times. Works just fine if you are able to keep on top of things (and not run up the card).

 

[NoTalentHack]

Could someone familiar with those 0% APR introductory offers reality-check the following scenario?

I'm writing a story involving a disagreement between an excessively cautious guy and his more adventurous girlfriend about how to pay for an expensive purchase he's been wanting. Let's say he's ~1k USD short and it'll take him ten more months to save up that amount.

She points out that he's got one of those spam letters offering him a credit card with 0% interest for 18 months. He could put it on the card, pay it off with plenty of time to spare, and not even pay interest.

He's concerned about failing to repay and getting hit with the 27% APR. Or, worse, giving in to temptation, running up a balance, and really screwing himself over. Also, he just has no experience with consumer debt; he's a second-generation immigrant and his parents did everything in cash.

Does this seem like a plausible setup? Do both sides seem reasonable? I don't want her to seem reckless for suggesting it, nor do I want him to seem ridiculous for having concerns.

One trick the companies use is that the higher interest debt is paid last, so if he does use the card to buy something, any money applied to it will go in this order: interest, then 0% debt, then 27% debt. In other words, they bury the highest APR debt at the back, so that it will continue to accumulate interest.

As to the setup, definitely. Especially if she's from a wealthier family that's used a lot of credit but always been able to pay it off with no issue. That's something that happens a lot, and why college campuses and the adjoining blocks are rife with tables offering swag for applying for credit cards; they know that a good chunk of those folks are from families that never really bothered to teach their kids about the dangers of credit cards.

 

[BobbyBrandt]

I think it will depend on how responsible and diligent you write the character to be.

His fears as described seem to indicate that he questions his ability to properly handle the responsibility of budgeting to make the payment each month. Or, he could simply be fearful of his lack of experience in dealing with debt even though he has demonstrated that he is responsible enough to handle it.

How you develop the girlfriend can also influence things. If she is flighty and irresponsible in her own financial matters, her attempts to influence his decision would likely lack credibility with him. If she herself is responsible and sees him as also being so, she could be trying to build his confidence in taking a risk that she views as minimal.

 

[Lumiere_Amie]

He's not going to get a legitimate 0% offer if he has "no experience with consumer debt". You must have a good credit history to get those offers. So, that being said, it must not be a legit credit company and therefore you are free to make up any deal that you want! This is fiction, let your imagination run free! It's all in the fine print

Here are some sample LEGIT offers. https://wallethub.com/credit-cards/0-apr/

 

[joy_of_cooking]

You must have a good credit history to get those offers.

I thought you could build up a credit score using things like utilities and rent payments? But maybe I could say that he has a credit card but has never carried a balance.

I think it will depend on how responsible and diligent you write the character to be.

Especially if she's from a wealthier family that's used a lot of credit but always been able to pay it off with no issue.

Great idea, thank you. Let's say she grew up middle-class and he didn't, they're both responsible with money but his parents inculcated an excessive fear of debt and hers didn't. Maybe she's done this trick before (like @astuffedshirt_perv did).

 

[Lumiere_Amie]

I thought you could build up a credit score using things like utilities and rent payments? But maybe I could say that he has a credit card but has never carried a balance.

Rent and utilities don't typically get reported on your credit report unless you fail to pay.

https://www.credit.com/blog/how-to-add-rent-and-utilities-to-your-credit-report/

 

[pink_silk_glove]

Does this seem like a plausible setup? Do both sides seem reasonable? I don't want her to seem reckless for suggesting it, nor do I want him to seem ridiculous for having concerns.

This is not only plausible, it's probable. Especially if he has zero experience in consumer debt. Most people do not understand the math behind their debt. That's why the credit card companies make the math so complicated. The less that you understand about your own money, the better.

I green-light you on this one all the way!