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Special financing offers have a big catch

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Is a store credit card worth it?

Dec. 3, 2018

Retailers pull out all the stops this time of year to get you to spend your money with them. That's why so many have “special financing offers” for big ticket items, such as furniture and appliances.

You've probably seen the ads: No interest for 6, 12, 18 or even 24 months.

These “deferred interest” offers can save you a bundle, but there’s a big catch.

If you don't pay off the balance in full by the end of the promotional period, or if you make just one late payment, you’ll get hit with all the accrued interest on the full purchase price at the store’s sky-high interest rate. That can really set you back.

Let’s say you buy a TV for $1,000 and you don’t pay off the entire balance in time or miss a payment. Assuming the interest rate on that card is 25 percent, the average APR for store cards right now, you’ll be charged nearly $250 in accrued interest.

And remember: You will never pay off the balance by the end of the promotional period, if you only make the minimum monthly payment.

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