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Zero Percent Versus Deferred Interest Credit Cards

GreenPath Debt Solutions helps explain the difference which could add up to savings

FARMINGTON HILLS, Mich., Feb. 28, 2013 /PRNewswire-USNewswire/ -- GreenPath Counselor David Flores recently was asked about zero percent interest credit cards, how they work and how they are different from "deferred" credit cards.

"In any situation, a consumer must read all the fine print carefully and know specific information about the credit card terms," said Flores.  "Before signing, you need to know length of the zero percent interest rate and what the interest rate will be after the introductory period."

Flores listed some common questions that consumers should ask:

What is the length of the 0% interest rate? Many 0% or "teaser" rates come with a very short life, usually 3-6 months. Once the 0% rate expires, the new rate is most likely going to be much higher.

What is the rate after the 0% expires? Knowing what the actual rate is after the 0% expiration is key, because if you do not plan on paying off the account within the 0% rate time period, your entire balance will be impacted by the new higher rate. This will result in a much higher minimum payment.

Is it a "deferred" interest card or a 0% interest card? Some card companies have "deferred" interest cards that may look like 0% cards but are not. Interest accrues on deferred interest cards, but you are not charged the interest if you pay off the balance in full by the 0% deadline.

If you do not pay off the balance, the interest is capitalized onto your remaining balance so, in the end, you end up paying a high rate on a higher balance then you originally had.

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