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Q: I purchased several expensive electronics items with my Best Buy credit card because the card promised that I wouldn’t pay any interest charges for 90 days. Now, though, those 90 days are over. To my surprise, I’m being charged interest on my entire purchase. What happened?
A: What happened is simple: You didn’t read the fine print that came with your credit card agreement.
Don’t feel bad. Few people do.
Store credit cards are notorious for promoting their no-interest-payments offers. They’ll boast that you can use their cards to buy pricey merchandise without having to pay interest on it for three months, half a year or longer.
The problem is, there’s a catch. You have to pay off the entire purchase before the no-interest period ends if you want to truly get away without paying any interest.
If you don’t pay off your purchase during the interest-free period — whether it be 90 days or longer — you’ll soon receive a nasty surprise: The interest on the purchase will be backdated to the date of the original transaction then added onto your balance.
The lesson here?
There are two.
First, don’t trust store credit cards. Applying for one is almost never a good financial decision. Instead, think about getting a cash back card with an introductory financing offer. This will almost always be a better card with better perks. And a better deal overall for you.
Second, when it comes to no-interest-payment offers, make sure you can pay off your purchase entirely during the interest-free period. Otherwise, you’ll end up paying that interest anyway.
This applies not only yo store cards. This applies to all introductory finance offers and balance transfer offers. Read the fine print to make sure that any remaining balances will not be charged interest relating back to the date of origination. Or make sure that you pay the balance in full by the end of the intro financing period so that you are not hit with those surprise fees.