The 2 Kinds of 0% Financing, and Which One Bills You Retroactively

Every payment made, and interest charged for the whole period

You financed something — surgery, a sofa, new flooring — on an interest-free deal. You made every payment they told you to make.

At the end you were charged interest going back to the day you bought it.

The monthly figure that could not clear the balance

1. You were offered interest-free finance over a fixed period.
2. You asked what to pay each month. You were given a figure.
3. You paid that figure every month, on time.
4. That figure was the minimum payment, not the amount needed to clear the balance in time.
5. A small balance remained when the period ended.
6. Interest was charged on the whole original amount, from the original purchase date.
7. The bill is hundreds of dollars on a balance of a few dozen.

Why two kinds of interest-free offer look identical

There are two kinds of interest-free deal and they look identical in the advertising.

In one, interest is genuinely waived and you only pay on what is left at the end. In the other — deferred interest — interest accrues in the background the whole time. Clear the balance in full before the deadline and it is canceled. Miss by a day or a dollar and all of it is charged.

The minimum payment is not designed to clear the balance before the deadline. Paying exactly what you are asked to pay, every month, produces the worst outcome available.

The arithmetic: balance divided by months remaining

Arithmetic done at the start. Balance divided by months remaining gives the payment that actually clears it. That is a bigger number than the minimum, and knowing both is the whole defense.

Where Plenee fits

This is the case where a calculation done on day one prevents the entire harm.

• It can work out the real monthly payment, balance divided by the months left, and

show it next to the minimum the lender asks for. The gap between those two figures is the trap.

• It tracks the deadline as a dated event, and can count down to it rather than

letting it arrive silently.

• It can warn while there is time to act. Three months out, with a balance still

outstanding, there is room to increase payments. Three days out, there is not.

• It sees the charge land if it does, which matters because the amount is usually far

larger than anything else on the statement.

Challenging retroactive interest

• Ask for the interest to be reversed, particularly if you were told a monthly figure

by the merchant or the lender. Being given a payment that could not clear the balance in time is the argument.

• Pay the remaining balance immediately to stop it compounding.
• Ask whether the deal was deferred interest or true 0%, and where that was disclosed.
• On any future offer, do the division yourself before agreeing anything.

How often promotions sit behind rate complaints

Complaints about an unexpected rate increase are about one in a hundred credit card complaints.¹ Just over half of them describe a promotional period ending and interest being applied retroactively.²