12 months, no interest -- I just got slammed with a massive charge of back interest :

[HousingCounselor]

This sort of thing happens all the time. A lot of people don't read or can't understand the terms of what their getting into. Furniture stores are notorious about doing the same thing.

When I bought my bedroom furniture I had the money to pay cash but I put it on a 6 month same as cash because I was determined to pay for it out of take home pay. Of course this was during the glory days when I was earning 6% on my savings.

I remember reading the card agreement in the store before signing. The finance person asked if I could step to the side as I was holding up the line of other customers who wanted to sign their agreements and leave. She then commented that she'd never seen anyone actually read the agreement before signing it. Of course I'm going to read it!!!! I paid it off in 5 months just to be sure I wouldn't be charged.

[photo]

She then commented that she'd never seen anyone actually read the agreement before signing it.

The same thing happens in doctors' offices. What's amusing is when you try to actually read something you're about to sign, the other person tries to explain it to you, as though you are illiterate. I've caught many things in documents that say an institution can "share" my information with others, and that information includes highly personal information. When I bring up that fact, I am met with a very stern, "We would NEVER do that." When I reply, "Then why does it say so in a legal document that you're asking me to sign?" the look is priceless.

Expect the worst, so when it happens you aren't mortified.

[Mr Tipps]

Sorry to hear what happened. Unfortunately you won't be the last person that this will happen to, but hopefully you may be able to stop it from happening to a few others.

You mention that you used the funds to renovate your kitchen? I am not sure how much equity you have in your home, but you may be better off contacting your bank or mortgage broker to borrow these additional funds and add them to your home. I doubt their is anything you could do to not pay the interest already charged, but you could significantly reduce the future interest payments by paying home loan rates versus credit card rates!

The other option may be to shop around for a low interest credit card and transfer the balance. Again, it wont save you the interest you were already charged, but the future interest would be less.

Hope this helps.

[YLTL_Dan]

I'm currently doing some research on this topic, and so far I've found the stat that 80% of no interest/no payment 'deals' aren't paid off before the original due date.

Since most people fail to stay within the contract and it is clearly a boon to retailers - some of which stay alive thanks to this setup - I like the idea of these contracts getting questioned.

If I offered someone a $10,000 loan today (no interest/payments for one year) and told them they could have it for a full year, most people would take it even after I told them the dangers (accrued interest). We are an optimistic creature and unfortunately most of us need protected from our optimism getting turned against us.

[disneysteve]

I'm currently doing some research on this topic, and so far I've found the stat that 80% of no interest/no payment 'deals' aren't paid off before the original due date.

I have no idea if that is accurate or not but even if it is, that is not the fault of the lender but rather of the borrower.

most of us need protected from our optimism getting turned against us.

And what would that protection consist of? Should lenders not be allowed to make these offers because people are too irresponsible to follow the rules? I'm a firm believer that they can not legislate away stupidity as hard as they may try.

[johna]

Similar thing happened to us

We had purchased a John Deere snow blower from a large home improvement store under the 12 month same as cash deal. Then our refrigerator died a few months later. We again did the 12 months same as cash. Then our dishwasher died. You guessed it...12 months same as cash. I calculated to the penny the monthly payments. The credit card company then pulled a fast one. They did not apply the payments to the item that was expiring first. They applied the payments across the board. So a the end of the first 12 months, I was charged a HUGE fee. It took several phone calls to straighten this out. Be careful when taking advantage of these special offers. The credit card companies are getting really tricky!

[YLTL_Dan]

And what would that protection consist of? Should lenders not be allowed to make these offers because people are too irresponsible to follow the rules? I'm a firm believer that they can not legislate away stupidity as hard as they may try.

That's why I didn't lay down a specific prescription

I have a hard time saying the government should be invovled in any more than they already are, but more information could help some. For example, just like cigarette companies who have to put the hidden dangers on their labels, maybe these short term financing companies should do the same. Clearly defined stats of how many people fail to comply with the terms, exactly how much it will cost them when they do. Not telling someone something can be just as deceitful as telling a lie.

[dczech09]

Pardon my french, but the credit card companies are not responsible for the incompetence of others. Same goes with the tobacco companies, and other businesses for that matters.

People always cry about asymmetric information and that the consumer knows so little. The real problem is that people blinding buy things or sign contracts without understanding what they are getting themselves into. Case in point- the guy who got hit with back interest.

The companies are not hiding anything from us as comsumers, it is all in their disclosure statements, which are essentially like "rule books" so to speak.

I think that a lack of real formal education, mixed with people caring more about what is on American Idol or some other show, creates an issue. We do not need more government regulation; we have enough of it. We need people to take responsibility and actually take the time to inform themselves.

[YLTL_Dan]

Pardon my french, but the credit card companies are not responsible for the incompetence of others. Same goes with the tobacco companies, and other businesses for that matters.

We might be off topic

However, I disagree on this point. Tobacco products were never advertised as dangerous to your health until recently. They were glamorized and people learned the true effects later.

You say that companies aren't responsible for "the incompetence of others." Wow, you must be incredibly smart and a lucky soul to never have fallen victim to false advertising, misinformation, or under-information. We'd still be gassing our cars with leaded gasoline, drinking poisoned water from unregulated plants, and eating contaminated foods if not for government regulation. "Companies" can't have a free-for-all and then blame the "incompetence of others" for buying their harmful products. I don't have the money and time to research every single product before I buy, so I trust that it's being regulated at some level.

[YLTL_Dan]

Duplicate

[dczech09]

Ok perhaps I should rephrase. Or maybe just reiterate about the disclosure statements I had mentioned? The information is available in that situation, its just a matter of reading it.

Is SOME regulation necessary? Yes but only to the extent that it protects the consumer. Should government be doing this? Not in an ideal world. In an ideal world, businesses would exist to be "whistle-blowers" or inform and educate society. Case in point: look how Standard & Poors and Moodys are private enterprises that essentially regulate the financial industry to an extent. Or how about the FINRA? That is not a government entity either; its made by the financial industry.

I do not believe in over regulation, especially by a government that is too generalized and knows little about everything. How are a few select bureacrats supposed to make good regulation decisions when they do not know what is on the other side of the tracks?

Dan, you implied that businesses could run free without regulation and that would effect all of us? I completely disagree with that implication and find it erroneous, with all due respoect. Why do I say this?

Who runs these "businesses" such as credit card companies and tobacco companies? People. Also known as consumers. They are people like you and I and have the same propensity to use their own product as we do. I used to work in a bank and some employees there had more debt with that respective bank than you could count. What water company is going to serve poisoned water when the very people who work there are also customers? They be essentially poisoning themselves.

Also, if businesses were just allowed to do whatever they wanted regardless of the impact on society, couldn't the customers simply say they're fed up by NOT doing business with them? I think free market enterprises and selection creates an situation where it is advantageous for businesses to do what is right. In a free market I can choose not to do business with the tobacco companies because their product causes cancer. In a free market I can choose not to eat MCDs everyday because it is unhealthy food. In a free market I can choose not to buy Nike because I dislike sweatshops.

Government over-regualation distorts it all because one person cries wolf. Contrary to popular belief, not all businesses are evil. And the ones that are evil will be killed by a free market of people who wont do business with them.

[crazyskunk82]

I've been there. A few years back, before we decided to pay off our debt and be responsible, we had bought living room furniture. $1,500 at 0% interest. Our friends had done it and paid it off quick. We paid about half of it before running into some financial trouble (not having a budget or emergency fund), and had to start making minimum payments. Then before we knew it, a year was up. After the back interest, we were back to owing $1,500. Two years later, after making minimum payments, we owed $1,200.

We just recently paid the whole thing off in one shot during our debt snowball. The final cost was well over double the original.

[flipyourdebt]

Sounds like a tough situation. It may still be a good idea to consolidate your debt. You can probably get a more competitive interest rate.