Finance tip: Using promotional rates

Ahhhh, you open the mail and see an offer for a new credit card to your favorite store with a “deferred interest” promotion tag and you jump on it. Truly a blessing if you have decent credit and qualify for the perk! Imagine buying that slick pair of Yeezy’s with the iridescent look, and paying no interest for 6 months on the sticker price!

Well as the saying goes, “everything that glitters aunt Gold.” Deferred interest means that the interest on your purchases is still being calculated in full, just hidden from you. If you don’t pay off the FULL balance in 6 months, the back dated interest in full will be charged to your account.

Ex: Buy a pair of shoes for $100 with 6-month deferred interest card. Apr is 25%.

You pay monthly and after month 6 you owe $5 on the account. Your account will be charged $12.50 ($100 x 25% x 6/12 months)

Some people think deferred interest is 0% interest. This is false and while I love using promotions like this via best buy, Macy’s etc., you always have to make sure to pay off in FULL before the promotion ends.

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