While on the surface these offers sound like incredible deals, the fact is that we need to look closely at the fine print.
A recent holiday sale ad for a national electronics store stated that if you purchase today, you would pay nothing (zero interest and zero payments) for six months.
The fine print reads as follows:
“Offer is subject to credit approval. No finance charges assessed and no monthly payments required on promotional purchase amount if you pay this amount if you pay this amount in full by the stated payment due date as shown on your (6th) monthly billing statement after the purchase date. If you do not, finance charges will be assessed on promotional purchase amount from purchase date and minimum monthly payments will be required on the balance of the amount. If minimum monthly payments on any other balances on your account are not paid when due, all special promotional terms may be terminated. Standard account terms apply to promotional balances and after promotion ends to promotional purchases. Variable APR is 23.48% as of 10/1/02. Fixed APR of 24.75% applies if payment is more than 30 days late.”
In other words, if you do not pay the purchase balance in full by the time you receive your sixth month billing statement, you will pay 23.48% interest for the full amount back to the date of purchase and until your account is paid in full. In addition, if you make one late payment on your account, the financing company has the right to impose the higher rate of 24.75% on your account whether you reach the sixth month or not.
