That gorgeous top-of-the-line 65-inch HDTV may seem the stuff of pipe dreams until the sales guy chimes in with the news that his big box is now offering 12 months of zero-interest financing. Yes, credit is cheap these days, but anyone selling you free credit isn't telling the whole story. Rather, they're doing their best to make complicated look simple, and potentially make exorbitant total costs sound reasonably affordable.
The terms of deferred-interest deals, which typically take the form of credit cards, are almost always crafted using clinical but deliberately complicated and obfuscatory terms. The reason: If you make a simple mistake, it can produce a windfall for the retailer. For instance, many such deals have a clause that if you are late even a day with a payment (or fail to pay back the entirety of the debt for any reason in the allotted time period), then you not only lose your interest-free status, but you also owe interest back to the date of purchase. And that means an APR penalty rate that soars as high as 29.99%. Suddenly that HDTV doesn't seem so cheap after all.