I encourage everyone to beware of tempting credit card offers from retailers during Black Friday and holiday shopping. Many retail credit cards are advertised with 0% interest. However, if you do not pay off the balance in full before the offer period expires, some retailers will charge deferred interest and retroactively apply the full APR to the entire original balance and not just the amount that was not paid back on time. It is as if the consumer never had an interest free period to begin with.
For example, if you charge $800 on your retail card with a deferred interest option and only pay back $799 after the introductory period ends, then you owe an extra $55 in interest, whereas a traditional card without a deferred interest option you would only owe an extra $2 in interest.
According to CardHub, the 50 largest retailers have an average APR of 25%. Of those retailers, 42% have a deferred interest option for their retail credit cards. A few popular names include: Amazon, Apple, Lowes, Walmart, Pottery Barn and Macy’s.
For more information: https://money.cnn.com/2013/11/22/pf/retail-credit-cards/index.html?section=money_pf
Are you a victim of overwhelming credit card debt due to hidden credit card costs such as deferred interest? If so, please schedule a free consult with one of our firm’s debt settlement attorneys to explore your options.
Kevin Fallon McCarthy
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