Zero-interest credit cards great deals for rule-followers

WASHINGTON – Several large credit card companies are offering zero-interest cards to shore up customers, but unless you’re careful, the deal could cost you.

Jennifer Waters, a consumer confidential columnist at MarketWatch, says the deals are great as long as you follow the rules.

“The rules are what you would have with any credit card. You have to pay on time and you can’t skip payments and things like that,” Waters says.

“If you do miss a payment or you’re late on a payment, they’ll revert you to what they call the go-to rate. … those rates are 20 to 25 percent,” she says.

Waters says about 40 percent of all major issuers are offering what she calls a “teaser-rate,” which is zero-percent interest for a certain amount of time, usually between 12 and 18 months.

After that time, the card reverts to the “go-to rate.”

If a card holder misses or is late on a payment, the high-interest rate kicks in retroactively from when the card was opened, Waters says.

“I must remind you, the banks are in the business to make money.”

Many banks are offering the promotional rate to folks with less-than-perfect credit, Waters says.

“They’re starting to spread to FICO scores to 620 and 699,” she says. “They’re really trying to target some of those recovery-mode people.”

“It’s a good deal. It’s in essence a free loan, if you can follow the rules.”

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(Copyright 2012 by WTOP. All Rights Reserved.)

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