The Credit CARD Act of 2009, which rolled out its biggest batch of rules in February 2010, eliminated a number of anticonsumer practices used by credit card issuers, such as "any time, any reason" rate increases on existing debt.
Among the many provisions in the legislation is a requirement that promotional rates on credit cards last at least six months. An article I read this morning pointed out that this provision also applies to deferred interest plans, those buy-now, pay-later deals offered by furniture stores and other retailers. As of Feb. 22, 2010, stores could no longer offer a "no interest for 90 days" credit card or similar short-term deferred interest plans.
"Retailers and their partner banks can still offer them, but they must be at least six months," Chi Chi Wu, a staff attorney with the National Consumer Law Center, confirmed via e-mail.
Keep this tidbit in mind the next time you go shopping for furniture or a new TV. The retailer doesn't have to offer a deferred interest deal, but if it does, the promotional period must span at least half a year.
If you do sign onto a deferred interest plan, make sure to pay the balance in full during the promotional period. If you still have a balance remaining when the interest-free period ends, interest will be charged retroactively on the full purchase amount.
Have any of your local stores tweaked or dropped their financing offers?
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