Buy now, pay later offers on big purchases may sound great, especially when you are approved for a loan you might not have pay off over the years.
However, Consumer Reports says you should be wary of those ‘deals.’
Doug Watts says buying his televisions with a deferred-interest credit card from Best Buy was one of the dumbest moves he ever made.
A nasty surprise came in an email when the three-year promotional period was up.
Watts said, “They added $1,300 in interest on a balance of roughly seven or $800.”
The original receipt Watts signed contained loan terms he says were hard to find and unclear.
However, they said if he didn’t pay everything off in three years, he’d be charged interest on the entire bill, even on the money he had already paid.
Christina Tetreault, an attorney and financial expert, says although the terms of deferred-interest cards have recently been clarified, you can still get trapped.
Tetreault said, “The disclosures on these cards are really not enough to help consumers understand what they’re actually buying.”
Besides Best Buy, Home Depot, Wal-Mart and other retailers promote deferred-interest loans.
You can also find solicitations for deferred-interest credit cards designed for health care expenses at doctors’ offices.
She said, “The very location of the solicitation within a doctor’s or a veterinarian’s office or a dentist’s office is inherently exploitative.”
Consumer’s Union, the advocacy arm of Consumer Reports, says deferred-interest cards are dangerous financial products and often carry high-interest rates.
Consumer’s Union and other consumer groups have asked the new federal financial watchdog board to look into deferred-interest credit cards.