This week,
However, all three of these offers come with one big condition: no interest if paid in full during the promotional period. If you do not pay the balance in full during the promotional period, you will get hit with a retroactive interest charge at the standard purchase interest rate. If you don't pay off the balance in full during the promotional period, you aren't actually getting a promotion at all. The interest rates on the credit card range from 14.24% to 27.24%, so the retroactive interest charge could be significant.
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If you are looking to finance your iPhone purchase, there are better deals available. People with good credit can take advantage of credit cards with longer 0% purchase offers and more generous terms. As of the publish date of this post, Citibank currently offers a 0% intro APR on purchases for 21 months with its Simplicity credit card. With Simplicity, the interest is waived during the promotional period, not deferred. If you have a balance remaining after 21 months, you would only pay interest on the remaining balance, on a go-forward basis. To find good 0% purchase offers updated regularly, you should shop online at sites like MagnifyMoney and NerdWallet.
The Problem With Deferred Interest Promotions
The CFPB remains highly concerned with deferred interest products. According to Director Cordray, "deferred interest products remain the most glaring exception to what has been the generally positive post-CARD Act trend toward upfront credit card pricing."
People with excellent credit scores, in general, can still get a good deal from deferred interest products and pay no interest. According to the CFPB, customers with the strongest credit scores avoid paying interest almost 90 percent of the time. However, people with weaker scores end up paying interest nearly 50 percent of the time. Because the interest rates on cards that offer deferred interest rates are usually higher than general purpose credit cards, higher risk borrowers would have been better using a traditional credit card to finance their purchase. For example, the highest interest rate on Citi Simplicity is 23.24%, compared to the highest rate of 27.24% on the Apple product. The "no interest" promotion is enticing, but higher risk consumers would likely have been better off financing their phone on a standard credit card.
People with good credit scores can easily find longer 0% offers. People with lower credit scores and borrowing needs should look for a better interest rate from a standard credit card or credit union. And if you do decide to use a deferred financing product, only sign on the dotted line if you have complete confidence in your ability to pay off the debt completely during the promotional period.
Nick Clements is the Co-Founder of MagnifyMoney
