credit cards

Why 0% financing from retailers can be a bad deal

It pays to understand all the rules
It pays to understand all the rules | Hailley Howard / EyeEm/Getty Images

It pays to understand all the rules

Leave any of the balance unpaid, and you owe the interest that's accumulated over the last year, not just interest on your current balance, says Bourke. That often surprises consumers, he says.

Additionally, if you make a payment 60 days late, you forfeit your deferment period and 0% financing. The new APR could be a penalty rate that's higher than the regular rate that would have kicked in once the deferment period ended, says Wu.

Another point that confuses some consumers: The final payment due date. Your billing cycle may not coincide with the end of your deferment period. In that case, be on the safe side by using the end of the deferment period as your due date. That date should be displayed on every bill, says Wu.

One solution: Set your own payoff plan to have it paid in full well before the due date.

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Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

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