credit & debt

Deferred-Rate Cards Can Be a Ticking Time Bomb

Pay off deferred-rate cards before the low rate expires.

If you opened a retail credit card with a deferred-interest plan to save on your holiday shopping, be sure to pay down your balance well before the no-interest term expires. Otherwise, you’ll start 2019 in a world of hurt.

Retail credit cards that entice shoppers with these promotions often bury the catch in fine print: If any amount remains after the deferred-interest period expires—which can be in as little as six months—or you are more than 60 days late in making a minimum payment before the period ends, you can be charged interest retroactively on the purchase price. On top of that, the average rate on retail cards is almost five percentage points higher than average overall credit card rates, reports CreditCards.com.

If you overspent on your regular credit card and are racking up interest charges, one strategy is to transfer your balance to a new card that charges no interest on transfers for a set period of time. For the next holiday season, consider using a general-purpose rewards card rather than a retail card.

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