Deferred Interest versus No Interest Credit Cards

One of the reasons families who live in Rockland County, New York, wind up having to file bankruptcy is credit card debt. Although a family may be able to swing regular payments, at least on the interest, when everything is going well, big credit card balances combined with unemployment or a medical problem can cause a family’s finances to unravel quickly.

This is why families in New York need to be careful when signing up for the latest, greatest credit deal, especially on the spur of the moment when making a big purchase. As alluring as those retail store offers can be, it is important for consumers to be aware of the fine print and details of the deal they are making with the credit card company.

For example, many stores offer zero interest promotions. The idea is that if a customer buys a big ticket item and pays it off in a few months or even a year or two, then they owe no interest. If the family actually follows through and pays everything, they successfully avoid the notoriously high interest rates credit cards charge. If not, one of two things might happen, and the outcome will depend on the terms of the agreement.

Specifically, if the credit card was a “deferred interest” offer, then the person may wind up owing hundreds of dollars in interest. This is because in a deferred interest arrangement, the credit card company still charges interest, but it just does not send the bill unless and until the balance does not get paid. A true “zero interest” deal, on the other hand, means that while a family may have to pay interest on a balance going forward, they do not have to worry about interest up to that point.