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Avoid deferred interest credit card gotchas

5:42 PM, Nov 14, 2013   |    comments
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WASHINGTON, DC (WUSA) -- Doug Watts now says buying his TV with a deferred best buy credit card was the dumbest move he ever made.

"They added $1,300 in interest on a balance of roughly $700 or $800.

The original receipt Watts signed had loan terms he says were unclear and hard to find.

The agreement said if he didn't pay everything off in three years, he'd be charged interest on the entire bill, even on the payments he already made.

Attorney Christina Tetreault says although the terms of deferred interest cards have recently gotten clearer, you can still get trapped.

"The disclosures on these cards are really not enough to help consumers understand what they're actually buying," she says.

Besides Best Buy, Home Depot, Walmart and other retailers promote deferred interest loans.

Deferred interest credit cards are even designed for healthcare expenses in doctors' offices for the most vulnerable people who struggle to pay for care.

Tetreault says, "The very location of the solicitation within a doctor's or veterinarian's office or dentist's office is inherently exploitative."

Consumers Union says deferred interest cards, while legal, are dangerous financial products and often carry high interest rates.

"They should be banned," says attorney and financial expert Tetreault.

Doug Watts says he'll never fall for another deferred interest pitch again.

Consumers Union, the advocacy arm of Consumer Reports and other groups have asked the new federal financial watchdog board to look into the deferred interest credit cards.

The Consumer Financial Protection Board says it will.

 

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