Grabbing a 'No Interest for a Year' Deal

These days, you can't go into a furniture or electronics store without seeing a "No Interest for a Year" offer. Sounds enticing: You get the product now, interest-free if you pay it off within the specified time frame. Such offers are now available at stores like Sears, CompUSA and Crutchfield.

But be careful with these deals. To get them, you often have to apply for a store credit card. What happens then? If the balance -- even a penny of it -- remains unpaid once the interest-free period is over, all interest payments that would have been charged without the offer are typically slapped onto your balance. "You'll still owe all the interest, and oftentimes it's at 20% APR or higher," warns Pam Poldiak, a fee-only Certified Financial Planner (CFP) in Roanoke, Va. Worse yet, if you make nonpromotional purchases on the same card, your payments are usually applied toward the no-interest balance, while new purchases accrue interest at full speed.


To protect yourself, read the fine print before you charge up that new card: Companies are obliged to fully disclose the terms of their promotional offers. Just recently, Home Depot and GE Capital Corp. agreed to pay $672,000 for pulling this exact trick on its customers in Connecticut and not disclosing their practices properly.