We see credit card promotions everywhere, sometimes at interest rate close to 0%. A bit bizarre considering the main source of income for these companies is made on interest rate. So since they are not making any money with them, how come these promotions are so common? Why do they keep coming? This is two short stories presented in an easy slide format of two guys trying to get full advantage of credit card promotions, but then get caught in their traps because they skipped very important details. You understand after that why credit promotions are so common, it is because of guys like them. They make up for all other customers taking full advantage of the promotion. So please, don’t be that guy.

1. creditfinanceplus.com
“Don’t be that guy”
The hidden side of
credit card promotions

2. It is very common nowadays to see credit cards with
promotional interest rates close to 0%.
Credit card promotions
creditfinanceplus.com
A bit strange considering credit cards company
make money with interest income, no?
So how do they make up for their
loss?

3. They make it up with people skipping important details
written in the fine print.
Credit card promotions
creditfinanceplus.com
The fine print reveals traps you have to be aware of. If not, you
might be the client that will make up for all the other clients
taking full advantage of the 0%.
So please… don’t be that guy!

4. Want to meet these guys?
Credit card promotions
creditfinanceplus.com
Meet Joe and Bob, two guys trying to take advantage of
promotional credit card rate.
Let’s go over their unfortunate, but very
common story…

5. Joe wants to transfer his credit card balance on a new credit
card showing an introductory 0% interest rate.
2 types of credit card promotions
creditfinanceplus.com
Bob wants to take advantage of a deferred payment and
interest promotion on furniture purchases.
Let’s start with Joe’ story.

6. Joe is being smart and wants to transfer his
outstanding credit card balance of $6,000 at 19.99% to
an introductory 0% card.
Getting a 0% credit card
creditfinanceplus.com
This may sounds obvious, but with a lower interest rate, a bigger
portion of his monthly payment will go on the capital, and
therefore his balance will go down faster.

7. Getting a 0% credit card
creditfinanceplus.com
Good news! He is accepted for a $10,000 limit, and the
promotion lasts 6 months!
With $1000 a month, he will be able to get rid of his debt and
save a few hundred dollars of interest cost.

8. With the extra room of $4,000 on his
credit card, Joe decides to get rid of
the other credit cards and only use
this one.
Getting a 0% credit card
creditfinanceplus.com
This seems to be a wise thing to
do, however it has some
unforeseen consequences…

9. After a few months, Joe realises that his initial balance didn’t go
down as much as planned, and decides to call the company.
Getting a 0% credit card
creditfinanceplus.com
The credit card company explains that the 0% is only applicable
for the transferred balance, not the new purchases.
So what does this imply?

10. Getting a 0% credit card
creditfinanceplus.com
Since he used his credit card for regular purchases, the monthly
payments went on the higher interest first, which was his new
purchases, not the initial balance…

11. This is a common mistake credit cards company wants you to
make. A lot of people believe the 0% rate is also applicable for
new purchases, but it is not!
Getting a 0% credit card
creditfinanceplus.com
Result for Joe? The promotion ends after 6 months, the
outstanding balance is not paid and the rate jumps to 19,99%...
Yes, he is “that guy” the credit card companies are looking for.

12. There are other mistakes that will cancel your promotional rate and
leave you with a regular rate close to 20%, such as:
Mistakes done on a 0% promotional credit card
creditfinanceplus.com
1. Forgetting making the minimal payments
2. Going over your limit
But that is not the only mistakes they want you to make…

13. Other possible mistakes are :
Mistakes done on a 0% promotional credit card
creditfinanceplus.com
● The temptation of postponing paying it off by only making
the very small minimal payment that is required in a low rate.
● Opening many credit card accounts and being forgetful.
● Ignoring the transferring fee; yes, sometimes it cost you less
to leave your balance with its higher rate and pay it off there,
rather than paying the transferring fee.

14. Deferred payment and interest promotion
creditfinanceplus.com
There is another type of credit promotion that contains crucial
details in the fine print. Let’s find out with Bob’s story.

15. Bob is moving in with his girlfriend and needs a bigger bed,
amongst other furniture.
Deferred payment and interest promotion
creditfinanceplus.com
He doesn’t have the money yet, but really needs the furniture
now, especially the bigger bed. Luckily, he sees a promotion of
no payment no interest for 6 months.
This promotion will give him enough time to save
and pay all new purchases within 6 months, before
the promotion ends.

16. After moving in, unexpected expenses come up (painting,
renovations, new products) and he decides to pay immediate
expenses instead of saving up for the furniture.
Deferred payment and interest promotion
creditfinanceplus.com
Six months later, Bob still saved enough to
cover 85% of the balance. He thinks the 15%
left going on a new interest rate will be paid
quickly. But he is in for a surprise…

17. Since he didn’t pay the entire balance at the end, he has to
reimburse the interest saved during the promotional period!
Deferred payment and interest promotion
creditfinanceplus.com
More bad news, the interest to reimburse is 29%! Ouch!
It gets even worse… the retroactive interest is on the entire
initial purchase, not just the 15% balance! Double ouch!
…yep, he is that guy.

18. Deferred payment and interest promotion
creditfinanceplus.com
Next time, Bob will know what to do, but tonight, he will sleep
on his new couch.

19. It is possible to get full advantage of such promotions to pay
furniture cheaper.
Deferred payment and interest promotion
creditfinanceplus.com
You can see how to accomplish it with this calculator:
http://www.creditfinanceplus.com/calculators/credit-
promotions-intro.php

20. Hope you enjoyed this presentation.
Here the complete article on credit card promotions:
http://www.creditfinanceplus.com/articles/credit-cards-zero-
percent-avoid-traps.php
creditfinanceplus.com
Thank you