TULSA, Okla. — Holiday shoppers face aggressive pitches for store credit cards promising instant savings and/or zero percent interest offers at checkout counters across the country.
2 News listened to financial experts warning about these attractive-sounding offers.
They point out the cards often come with expensive hidden catches that can cost consumers lots of money.
"The average interest rate on new store credit cards reaches about 30%,"according to Matt Schulz from LendingTree.
He adds, "The rate is significantly higher than most regular credit cards."
"Generally, if you're somebody who carries a balance, store credit cards just aren't for you 'cause the interest rate is so high," Schulz said.
Another real danger lurks within the zero percent promotional periods that come with many of these cards through a practice called "deferred interest" buried in the fine print.
"You will often get hit with a retroactive bill for all the interest that you would have accrued going back to the purchase date," Schulz said.
This costly surprise gets triggered by late payments, missed payments or failing to pay off the entire balance before the promotional period expires, according to Odysseas Papadimitriou from WalletHub.
"If you do not pay in full down to zero your entire balance before the 0% period expires, they assess interest to your entire balance as if you never got the 0% option," Papadimitriou said. "It's a very sneaky thing. It is hidden in a lot of cases in the fine print."
However, the experts also point out zero percent promotions can benefit consumers who can afford to pay off the full balance before the promotional period ends without any late or missed payments. In that case these offers provide a useful tool for spreading out holiday purchases over several months without interest charges.
Schulz emphasized the importance of understanding the terms before signing up.
"It's another case of a financial tool that can work for you but that you have to understand the rules of the game so you can protect yourself and make the most out of it," Schulz said.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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