A majority of Americans don't understand this retailer financing strategy — and it can cost them big bucks

Asia's Tech News Daily

Shoppers carry purchases from a Best Buy store on Black Friday in San Carlos, California, U.S., on Friday, Nov. 26, 2021.Bloomberg | Bloomberg | Getty Images

Before you grab that great deal through a store's special financing offer, make sure you know what you are signing up for.

About half of retailers offer credit cards with deferred interest, yet 56% of Americans don't know how the financing strategy actually works, a study from personal finance website WalletHub found. It polled more than 300 U.S. adults in October.

That lack of knowledge could mean a big bill for you down the line. While you pay no interest or a reduced rate for a period of time, you may get a high regular APR retroactively applied to your original purchase amount if you pay one month's bill late or even owe as little as $1 when the promotional period ends.

For instance, if you charged $800 on a normal credit card that had a 0% APR promotion for six months, and it takes you seven months to pay it off, you'd owe $2 interest, assuming a 20% regular APR, according to a WalletHub analysis. With a deferred-interest card, you'll wind up paying about 27.5 times that amount — or $55 in interest — in the same scenario, the website found.

More from Invest in You:
43% of adults say they have financially cheated on their partner
Inflation is soaring. Here's how to navigate higher consumer prices
Half of Americans with retirement accounts have taken an early withdrawal

“It not only negates any savings there was from the promotion, you wind up paying much more for that item than you probably planned on,” said Jill Gonzalez, senior analyst for WalletHub.

Among those who do understand deferred interest, 77% think it is unfair and 69% think it should be illegal, the WalletHub survey found. (See WalletHub's list of retailers who use deferred interest credit cards here.)

Americans have an average of 2.33 retail credit cards and an average balance on those cards of $1,887, according to Experian's 2021 State of Credit Report. The interest rates are generally higher than other credit cards. They have an average APR of 27.93%, WalletHub said.

This time of year, it may be especially tempting to sign up for a deferred interest card in order to snag good deals on your holiday gifts. Yet, busy stores mean long lines and potential pressure to sign up without reading the fine print, Gonzalez said.

If you are offered the choice of special financing or an initial discount on your first purchase, go for the discount since there are no strings attached, she advised.

If you do take the deferred interest offer, make sure you listen carefully, know the terms of the APR and pay off the purchase before the introductory period ends.

To be sure, there are retailer credit cards that offer deals without deferred interest, including 0% introductory APR on purchases that lasts, on average, 16 months. About 29% offer ongoing rewards, primarily in the form of points, a WalletHub analysis found.

Think about retailers you frequent throughout the year and not just for your holiday shopping, Gonzalez said. For instance, stores like Target and Kohl's offer cards with perks like discounts or rewards, she said.

Just make sure you don't accumulate debt.

“People are certainly spending,” Gonzalez said. “There is a lot of pent-up demand and there is also inflation making costs higher for certain goods.

“There is that chance you will over-leverage yourself and spend money you do not have.”

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.

CHECK OUT: Former financial advisor who's managed over $140 million: Here's my best advice for new investors with Acorns+CNBC

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

KIC Metaliks Consolidated December 2021 Net Sales at Rs 135.44 crore, down 18.25% Y-o-Y

Reported Consolidated quarterly numbers for KIC Metaliks are: Net Sales at Rs 135.44 crore in December 2021 down 18.25% from Rs. 165.68 crore in December 2020. Quarterly Net Profit at ... Read more »

Hathway Cable Consolidated December 2021 Net Sales at Rs 455.03 crore, up 2.89% Y-o-Y

Reported Consolidated quarterly numbers for Hathway Cable and Datacom are: Net Sales at Rs 455.03 crore in December 2021 up 2.89% from Rs. 442.26 crore in December 2020. Quarterly Net ... Read more »

Tatva Chintan Consolidated December 2021 Net Sales at Rs 104.67 crore, up 30.65% Y-o-Y

Reported Consolidated quarterly numbers for Tatva Chintan Pharma Chem are: Net Sales at Rs 104.67 crore in December 2021 up 30.65% from Rs. 80.12 crore in December 2020. Quarterly Net ... Read more »

Moschip Tech Consolidated December 2021 Net Sales at Rs 38.29 crore, up 39.73% Y-o-Y

Reported Consolidated quarterly numbers for Moschip Technologies are: Net Sales at Rs 38.29 crore in December 2021 up 39.73% from Rs. 27.40 crore in December 2020. Quarterly Net Profit at ... Read more »

Magellanic Consolidated December 2021 Net Sales at Rs 64.96 crore, up 25.58% Y-o-Y

Reported Consolidated quarterly numbers for Magellanic Cloud are: Net Sales at Rs 64.96 crore in December 2021 up 25.58% from Rs. 51.73 crore in December 2020. Quarterly Net Profit at ... Read more »

Fineotex Chem Consolidated December 2021 Net Sales at Rs 105.07 crore, up 80.06% Y-o-Y

Reported Consolidated quarterly numbers for Fineotex Chemical are: Net Sales at Rs 105.07 crore in December 2021 up 80.06% from Rs. 58.35 crore in December 2020. Quarterly Net Profit at ... Read more »

Bhansali Eng Consolidated December 2021 Net Sales at Rs 341.52 crore, down 16.96% Y-o-Y

Reported Consolidated quarterly numbers for Bhansali Engineering Polymers are: Net Sales at Rs 341.52 crore in December 2021 down 16.96% from Rs. 411.27 crore in December 2020. Quarterly Net Profit ... Read more »

K-Way windbreaker brand taps hip new market with R&D line

The Associated PressModels wear creations as part of the K-Way men’s Fall-Winter 2022-23 collection, unveiled during the Fashion Week in Milan, Italy, Monday, Jan. 17, 2022. (AP Photo/Antonio Calanni) MILAN ... Read more »

Price diamonds continues to rise

Photo: ANP Diamonds seem to be getting more and more expensive. The world’s largest diamond producer De Beers has increased its prices by another 8 percent in recent weeks, insiders ... Read more »

Finance chief in talks to quit M&C Saatchi as it fends off takeover bid

Mickey Kalifa has been approached by Dept, a Carlyle-backed digital agency, just as his current employer fends off a takeover approach, Sky News learns. Read more »

Turkish leader Erdogan visits Albania to boost ties

On Location: January 17, 2022 Catch up on the developing stories making headlines.The Associated Press TIRANA, Albania — Albania and Turkey on Monday pledged to further boost their ties and ... Read more »

Omicron surge shows signs of easing in states hit early by the fast-spreading variant

A woman is getting a Covid-19 test at a drive through Covid-19 testing center as hundreds of cars and pedestrians line up to get Covid-19 test before Christmas holiday season ... Read more »

EAEU members to draft proposals on amendments to International Health Regulations

The parties discussed the current epidemiological situation in view of the Omicron coronavirus strain spreading worldwide Read more »

Bulk Deals | Societe Generale buys 57,406 shares in Alkali Metals; Nomura acquires 50 lakh Seacoast shares

Bulk Deals Societe Generale has acquired 57,406 equity shares in Alkali Metals at Rs 129.15 per share via open market transaction on the NSE, the bulk deals data showed on ... Read more »

India's growth in next 25 years will be clean, green, sustainable and reliable: PM Modi at WEF

PM Narendra Modi (File image) Citing India’s commitment to deep economic reforms and ease of doing business, Prime Minister Narendra Modi on Monday asserted that this is the best time ... Read more »

Oil steady as rising Libyan output offsets supply concerns

Representative image Oil prices were steady on Monday as investor bets that global supply will remain tight amid restraint by major producers were offset by a rise in Libyan output. ... Read more »

COVID-19 update | Maharashtra sees sharp fall cases at 31,111; 24 die, 122 new Omicron patients detected

Omicron | Representative image Maharashtra on Monday recorded 31,111 fresh coronavirus positive cases, 10,216 less than the day before, and 24 new deaths linked to the infection, the state health ... Read more »

Elderly send Parliament fire letter about AOW disconnection plan

Photo: ANP It is “incomprehensible” that the government wants to let go of the link between the state pension and the minimum wage. That says the elderly organization KBO-PCOB, which, ... Read more »

Newspaper: Activision fires dozens of people again for misconduct

Photo: ANP Game company Activision Blizzard has fired dozens of employees since last summer and punished another 40 for transgressive behavior. The company has taken action against previous allegations of ... Read more »

Prestige Estates Q3 sales bookings jump over 2-fold to record Rs 4,268 crore

Representative image Realty firm Prestige Estates on Monday reported over two-fold jump in sales bookings at record Rs 4,267.6 crore for the quarter ended December. The company’s sales bookings stood ... Read more »

National level model agreement required to deter builders from fleecing homebuyers: SC

The Supreme Court on January 17 told the Centre that it was not in favour of separate state governments having builder-buyer agreements, but would rather prefer a national-level model to deter builders from fleecing ... Read more »

UK's Johnson, and his foes, await key 'partygate' report

The Associated PressThis undated photo issued on Jan. 13, 2022 by GOV.UK shows Sue Gray, second permanent secretary at the Department for Levelling Up, Housing and Communities. Gray is a ... Read more »

Ralph Lauren CEO says metaverse is way to tap into younger generation of shoppers

Customers exit a Ralph Lauren Corp. store in downtown Chicago, Illinois.Christopher Dilts | Bloomberg | Getty Images Ralph Lauren CEO Patrice Louvet said Monday that the fashion brand is chasing ... Read more »

Paytm issues over 4.5 lakh FASTags in December 2021

Representative image Paytm Payments Bank on Monday said it issued over 4.5 lakh FASTags in December 2021, registering 11.33 per cent rise as compared to the previous month. Paytm Payments ... Read more »

Skeoch to deliver verdict on post-crisis bank ring-fencing regime

A 13-month review of the structure designed to protect UK taxpayers during a future banking crisis will publish its initial findings on Tuesday, Sky News understands. Read more »

UP Polls 2022: Congress to hold Pratigya Chaupals' for poll campaigning

Congress party | Representative image The Congress party on Monday said it will hold ‘Pratigya Chaupals’ all over Uttar Pradesh for campaigning in the state assembly elections, complying with all ... Read more »

Unilever does not give up after criticism of mega takeover plan GSK

You can never please everyone, but at Unilever they probably hoped for a little more enthusiasm about their grand takeover plan. “This is a very bad deal,” he said. And: ... Read more »

UltraTech Cement shares jump nearly 3% after earnings announcement

Representative image Shares of UltraTech Cement Ltd on Monday jumped nearly 3 per cent after the firm reported a 7.92 increase in consolidated net profit for the December quarter. The ... Read more »

ACM keeps an eye on dating apps on iPhone

At the end of December, the Rotterdam court confirmed a ruling by the competition watchdog, which put an end to Apple’s policy to only allow payments via its own platform. ... Read more »

GG Auto Gears Standalone December 2021 Net Sales at Rs 13.15 crore, up 152.43% Y-o-Y

Reported Standalone quarterly numbers for GG Automative Gears are: Net Sales at Rs 13.15 crore in December 2021 up 152.43% from Rs. 5.21 crore in December 2020. Quarterly Net Loss ... Read more »

Commercial vehicle industry may perform significantly better this year: Mahindra Group official

Source: Reuters The commercial vehicle industry is expected to perform “significantly” better this year as against the last financial year, with a strong double-digit growth, a top Mahindra Group executive ... Read more »

Artson Engg Standalone December 2021 Net Sales at Rs 41.92 crore, up 70.6% Y-o-Y

Reported Standalone quarterly numbers for Artson Engineering are: Net Sales at Rs 41.92 crore in December 2021 up 70.6% from Rs. 24.58 crore in December 2020. Quarterly Net Loss at ... Read more »

Good Luck Consolidated December 2021 Net Sales at Rs 705.80 crore, up 67.98% Y-o-Y

Reported Consolidated quarterly numbers for Good Luck India are: Net Sales at Rs 705.80 crore in December 2021 up 67.98% from Rs. 420.17 crore in December 2020. Quarterly Net Profit ... Read more »

Sonata Consolidated December 2021 Net Sales at Rs 1,858.02 crore, up 33.08% Y-o-Y

Reported Consolidated quarterly numbers for Sonata Software are: Net Sales at Rs 1,858.02 crore in December 2021 up 33.08% from Rs. 1,396.16 crore in December 2020. Quarterly Net Profit at ... Read more »

Bhansali Eng Standalone December 2021 Net Sales at Rs 341.52 crore, down 16.96% Y-o-Y

Reported Standalone quarterly numbers for Bhansali Engineering Polymers are: Net Sales at Rs 341.52 crore in December 2021 down 16.96% from Rs. 411.27 crore in December 2020. Quarterly Net Profit ... Read more »

Good Luck Standalone December 2021 Net Sales at Rs 705.80 crore, up 67.98% Y-o-Y

Reported Standalone quarterly numbers for Good Luck India are: Net Sales at Rs 705.80 crore in December 2021 up 67.98% from Rs. 420.17 crore in December 2020. Quarterly Net Profit ... Read more »

Tata Steel Long Standalone December 2021 Net Sales at Rs 1,677.22 crore, up 22.95% Y-o-Y

Reported Standalone quarterly numbers for Tata Steel Long Products are: Net Sales at Rs 1,677.22 crore in December 2021 up 22.95% from Rs. 1,364.17 crore in December 2020. Quarterly Net ... Read more »

Advik Capital Standalone December 2021 Net Sales at Rs 6.13 crore, up 4923.2% Y-o-Y

Reported Standalone quarterly numbers for Advik Capital are: Net Sales at Rs 6.13 crore in December 2021 up 4923.2% from Rs. 0.12 crore in December 2020. Quarterly Net Profit at ... Read more »

Mcap of BSE-listed companies jumps to all-time high of over Rs 280 lakh crore

Representative image Market capitalisation of BSE-listed companies jumped to an all-time high of over Rs 280 lakh crore on Monday as benchmark indices bounced back after taking a breather in ... Read more »

EU chief scraps meetings because driver is COVID-19 positive

BRUSSELS — European Commission President Ursula von der Leyen said Monday that she has canceled her in-person appointments at the European Parliament this week after her driver tested positive for ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic