0 Interest Credit Card Promotions May Be Deceptive, Regulators Say

Regulators are turning renewed scrutiny onto 0 interest credit card promotions, concerned that their terms of service are misleading.

In 2016, then-head of the Consumer Financial Protection Bureau Richard Cordray told Congress that he and regulators had significant concerns about 0 interest credit card promotions. This statement followed a report released by the agency showing that the number of purchases using 0 interest credit card promotions rose 21 percent between 2010 and 2013.

The bureau called these promotions the “most glaring exception” to the recent trend of upfront pricing after the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act. The Credit CARD Act was a widespread reform of credit industry practices that intended to eliminate hidden fees and deceptive practices.

0 interest credit card promotions, often offered on store-brand credit cards, allow consumers to buy big-ticket items and put off paying interest charges for the first six to twelve months. However, critics warn that these deals can be misleading and costly. Shoppers do not always realize that they will be hit with interest charges for the entire period if their balance is not paid off by the end of the promotion period.

A recent CardHub study of 49 major retailers found that almost three-quarters of the retailers offered special financing and nearly half of those retailers included a 0 interest credit card promotion. Citibank represented 35 percent of offers, Synchrony Financial represented 29 percent of offers, and Comenity Bank represented 12 percent of offers.

Synchrony Bank showed that 0 interest credit card offers made up 17.1 percent of its $65.7 billion outstanding credit loans as of Dec. 31, 2015. Despite that significant portion, Synchrony reported that 80 percent of transactions are paid off before the promotion ends.

“We are committed to ensuring consumers understand that deferred interest is a fair, transparent and easily understood product and that they understand how to avoid paying interest,” a spokesman for Synchrony Financial stated. “We have taken a number of steps to improve and enhance our disclosures and consumer education well beyond what the [Consumer Financial Protection Bureau] and the law require”.

However, not all transactions are paid off in time, and some consumers, especially those with low credit ratings, are left with high-interest fees to pay on top of their outstanding balance. While consumers with high credit scores pay off their card balances and avoid interest payments three-quarters of the time, consumers with low credit scores avoid interest payments only half the time.

Although credit regulators are working towards transparent and fair 0 interest credit card offers, some consumers still fall victim to the allegedly deceptive practices.

A 0 interest credit card investigation is looking into store-brand credit cards including Apple, Cabela’s, Disney, Home Depot, Kohl’s, Lowe’s, Menards, Sears, PlayStation and more. If you or a loved one participated in a 0 interest credit card promotion from one of these retailers and ended up with a large, unexpected interest charge at the end of the promotion period, you may qualify to participate in a free class action lawsuit investigation.

Join a Free Zero Percent Store Credit Cards Class Action Lawsuit Investigation

If you were unexpectedly faced with high interest charges on a store credit card even though you made the purchase on a 0% interest store branded credit card, you may be entitled to compensation.

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