Why Ohio Consumers should know the Differences between Deferred Interest and Zero Interest Credit Cards

Woman making large purchase with deferred interest credit card

Deferred interest credit cards have recently attracted the attention of the Consumer Financial Protection Bureau (CFPB). The consumer watchdog organization wants to put card users on high alert about how the terms of these credit cards are misleading. Ohio consumers who finance a large purchase with a deferred interest credit card should look at the fine print. Unless they are able to pay their balances off within the promotional period, Ohio credit card users could do serious damage to their wallets and possibly their credit scores.

Often, retail credit cards offer deferred interest promotions. Many of the banks associated with these credit cards have received letters from the CFPB, urging them to be more transparent with consumers. Ohio residents have probably encountered these credit card promotions while shopping at their favorite stores. The deal seems pretty simple. They sign up for the store’s credit card, make purchases, and pay no interest on the balance for a full year.

However, here’s a summary of the fine print on the contracts of most deferred interest credit card promotions:

  • If a balance remains on the credit card at the end of the promotional period, the consumer must pay the accumulated interest charges.
  • Interest charges are due on the entire amount, not just the remaining balance at the end of the promotional period.
  • Most deferred interest credit cards come with a “regular” interest rate of 25% or more.

Let’s say that an Ohio consumer signs on for a deferred interest promotion with a credit card issued by a home improvement store. They purchase a $1,500 snow blower with the new credit card. After a year of payments, they only owe $200. However, they aren’t charged an interest rate of 25% on $200, but the full $1,500. This means that they will owe an additional $375. No one wants to pay that.

How Ohioans can Successfully Manage any Type of Credit Card Account

It’s easy to mistake a “deferred interest credit card” for a “zero interest credit card.” But these two payment cards are actually very different. With a zero interest credit card, you are allowed a promotional period when no interest is charged. When the promotional period ends, you will be charged interest on any balance that remains on the credit card, but not the total amount that has been charged during the promotional period.

While it’s important for credit card issuers to be transparent about terms and conditions, it’s equally crucial for Ohio consumers to fully understand credit card agreements. Whether you’re signing up for a deferred interest or a zero interest promotion in order to make a big purchase, you should plan your payments accordingly. This means that you should make room in your budget to pay off the credit card balance before the promotional period ends. By using this strategy, you won’t have to worry about paying interest charges one way or the other.

Why Credit Report Monitoring is Important for Ohio Credit Card Users

Credit report monitoring is another part of successful credit card management. By regularly checking your credit reports, you can see whether they are accurate or not. For example, do you know for sure that none of your timely payments are inaccurately marked as delinquent? Unfortunately, mistakes such as these do occur. In fact, about 80% of consumer credit reports contain errors, and these inaccuracies can hurt your credit score.

Keeping tabs on your credit reports will also allow you to check for signs of identity theft. Sadly, a skilled cyber-hacker can steal a large portion of your personal data without your knowledge. By pulling and checking your credit reports from the major credit reporting bureaus every year, you can catch fraudulent accounts. If you do see incorrect information on any of your credit reports, it’s your right to have these items removed.

The good news for Ohio consumers is that they’re not on their own when it comes to getting their credit reports back on track. Ohioans can get a FREE credit repair lawyer to help them through the entire dispute process.

The Free and Legal way to Get Better Credit

Don’t let fraudulent accounts or errors on your credit reports bring your credit score down. At the Law Offices of Gary D. Nitzkin, P.C., we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? The law allows us to collect our fees and costs from the defendants in any successful action.  This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (888)293-2882 or sending him a message through our contact page.