0% APR Credit Cards or Financing? What does Deferred Interest mean?

So many credit card companies and retailers are offering a special promotion of “No Interest for 12 months”.  Is it zero interest? What are the terms or conditions for these types of promotions? 

The first thing to know is no one makes money by charging ZERO interest. Credit card companies and other financing companies are not known to give you anything for Free or to NOT MAKE MONEY!  

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So, what is the trap?  

Most, if not all, of these promotions are a “Deferred Interest Offer” not a “No Interest Offer.”  But here is the thing with deferred interest cards: If you do not pay your full balance before the promotional zero-interest period ends, you will be charged retroactive interest on the full amount. That can do a lot of damage to your finances, which is why you should avoid deferred-interest cards. 

Deferred interest deals entice shoppers by advertising 0% interest for a set period. Assuming you pay off your balance in full before the promotional period ends, you are fine. But if you have as much as a cent left, you will owe the remaining balance, plus back interest on your purchase. 

Say you buy a $1,000 computer with a deferred interest card that is interest-free for 12 months. If you have $40 left after 12 months, you will have to pay $40 in addition to retroactive interest — as if the original zero-interest deal never existed. 


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