Did you participate in a 0% interest promotion on a store-branded credit card and were charged an interest fee?
Store-brand credit cards offered by retailers are a fairly common practice. It can be hard for customers to resist signing up for one of these store credit cards because of the perks that come with them. But customers are starting to learn that these cards also come with their downsides, like interest fees that they claim are unfair and deceptive.
Some of the retailers being investigated for potential deceptive practices include:
• Conn’s HomePlus
• Forest River
• Mor Furniture for Less
• Raymour & Flanigan Furniture & Mattresses
Some stores offer credit cards and financing programs that come with promises of zero-percent interest owed. But customers can find themselves owing hundreds of dollars in finance charges.
The ad campaign for these deals usually states that there is “No interest if paid in full.” Credit experts explain that these store credit cards and financing programs are typically found at retailers that sell big-ticket items like furniture and appliances. They come with something called deferred interest.
Deferred interest begins adding up on the credit card when the item is purchased, but customers don’t have to pay this amount until the promotional period is over — six to 18 months later. Interest rates on these store credit cards can be as high as 30 percent.
If the credit card is not paid off on time or one payment is made late, customers end up facing these finance charges based on the full purchase amount, not the remaining balance. Buyers are typically not aware of these fees because they aren’t expecting to have to owe interest on the purchases.