The Little-Known Way Stores are Tricking You With Their Credit Card Offers

You’ve made your selections and are ready to ring out.

You’re about to pay cash when the cashier asks: “Would you like to sign up for our store’s credit card? There’s 0% interest for the first six months.”

And you think: “0% interest? Why not? I’ll pay it off slowly, and use the money to purchase other things now.”

Although it’s tempting — especially around the holidays — it’s a bad idea. A very bad idea.

Here’s the little-known reason why…

The Danger of Deferred Interest

Certain credit card agreements include a clause about “deferred interest,” which can be applied to your balance after the promotional period (those interest-free six months, for example) is over.

“Paying your bill a day late or having even a $1 unpaid balance when the promotional period ends,” explains WalletHub, could “enable the issuer to retroactively apply finance charges to your entire original purchase amount — as if the intro rate never existed.”

To illustrate the point, let’s turn to an example from CNNMoney.

“Say you bought that $1,000 appliance and paid off all but $50 of it by the time your deferred interest period ran out,” it explains. “You won’t just owe interest on the remaining $50; you’ll be liable for interest on the entire $1,000 and from the original purchase date.”

Um, what? Thanks but no thanks.

And if you think that won’t apply to you because you’ll pay off the balance before the promotional period ends, remember: Life often gets in the way.

For example, 16% of parents take longer than six months to pay off credit card bills from holiday gifts, according to a recent survey from T. Rowe Price.

If they purchased those toys on one of the dozens of store credit cards with deferred interest, that delay could be very bad news.

So before putting anything on credit, check the fine print — or better yet, wait until you have the money to pay for it in full.

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at, or say hi on Twitter @susan_shain.