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The Holiday Credit Card Trick Millions Fall for Each Year

With holiday shopping season in full swing, millions of Americans will get offers to open new credit card accounts. Yet as attractive as those credit card offers might be, with 0% financing offers and other tempting incentives, there's a catch that can cost you hundreds of dollars in finance charges if you're not careful.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at these popular 0% credit card offers. He notes that the offers give you a certain amount of time to pay off the balance interest-free, making them useful for those who have the financial wherewithal to pay down their debt at will. But as Dan also points out, many cards charge deferred interest retroactively if you fail to make a payment or don't pay off your full balance as the initial offer's fine print specifies. With a study from CardHub naming Amazon.com (NASDAQ: AMZN  ) , Apple (NASDAQ: AAPL  ) , Lowe's (NYSE: LOW  ) , and Wal-Mart (NYSE: WMT  ) among the retailers offering cards with potential deferred interest, shoppers have to be careful to know what they're getting into when they accept a card offer.

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Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 27, 2013, at 7:29 PM, TimsRedbeard wrote:

    Hello fellow Fools,

    As mentioned in this article which Dan speaks about it is so very true. Many of these credit companies don't follow their own rules. This happened to me once. NEVER AGAIN! Back in the 80's I purchased some high end audio equipment. The contract stated zero interest if paid in full before the end of the contract. I believe it was for 6-8 months. NO payments were due any month. If late then fines plus 25% interest accrued from day one. I went to the local branch who made this contract one day earlier than the contract ended so as not to be late and keep me from paying any interest. I was told they were not legally required to follow the contract. I was told "that contract didn't allow for a zero interest credit" ! I asked them to show me anywhere on this contract were it mentioned that. The contract plainly stated zero interest for this specific time frame. The company was unable to show me anywhere on the contract that they were right. I became so fed up with their BS I paid the interest, not even thinking I could have gone to small claims court to fight it, but I would needed to take time which I did not have any to spare.

    Never ever will this happen to me again. Especially when you have the cash in your pocket when making the purchase! May it never happen to you.

    Take Dan exactly as he said.

    Redbeard

    p.s. Their is no free lunch.

  • Report this Comment On November 29, 2013, at 3:55 PM, robscan wrote:

    On the flip side, these are great deals if you are able to manage your money and make the payments on time and for the correct amount. First check the prices on the items you want to purchase with several sources so you can be sure you are not paying the interest in the price up front. Then use online banking to make the payments on auto pilot. Set the payment date a week before it is actually due, so you avoid the Sunday due date scam that all credit issuers use.

    Properly managed, this is a great way to purchase high ticket items. I've done it often.

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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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