Class Action Investigation Looks into Zero Percent Credit Cards

A class action lawsuit investigation has been launched, looking into claims that certain companies put consumers in a financially compromising position with zero percent credit cards.

Consumers have been reportedly surprised by unexpected lump sum interest charges, when these heavily marketed zero percent credit cards are supposed to pose minimal risk of such fees.

However, these store brand zero percent credit cards have allegedly been causing severe financial hardship for many consumers, which has spurred the class action investigation and the consumer population to educate themselves about these promotions.

First and foremost, consumers are learning the key differences between the offers of “no interest if paid in full within 12 months” and “0% intro APR on purchases for 12 months.”

The “no interest if paid in full within 12 months” or deferred interest cards are frequently offered when customers are purchasing large items like appliances or furniture, essentially items that would be difficult to pay in one installment. It is important to note that this interest may quickly accumulate if the purchase is not paid off within the promotional period, with a rate of around 25 percent.

As for the “0% intro APR on purchases for 12 months,” promotional deals like this may have a changing interest rate that typically goes from zero percent to 25 percent after the deal is over. While the higher interest rate is intimidating, the consumer is not charged any back interest.

Overview of Zero Percent Credit Cards and Other Promotional Offers

These deals offer consumers the opportunity to pay no initial interest on a large purchase, such as an appliance. But depending on their specific terms, one offer charges no interest during a designated time period and the one merely defers the interest the customer normally would have had to pay.

If customers still have a balance remaining after the promotional period has ended, they could face serious interest charges. According to the Consumer Financial Protection Bureau, consumers are purchasing large items during such promotions, with over 1/3 of consumers paying 150 percent of the balance.

However, many of these consumers confuse this for zero percent interest, so it is important for consumers to understand all the terms connected to zero percent credit cards, or they could end up paying a huge lump sum payment after the end of the promotional period.

When consumers are deciding whether or not sign up for zero percent credit cards or other promotional deals, they should look out for key details including:

• The time period of the promotion and any additional fees
• Look out for keywords like “if” or “until”, and how they are being used in the context of the deferred interest options
• Look out for phrases like “no interest if paid in full in 6 months,” or “buy now and pay no interest until next year”
• Know the interest rate on the card, and what the interest rate may jump after the promotional period is over
• Have a payment plan in mind, when signing up for the card

While zero percent credit cards are routinely marketed by different retailers across the country, consumers are discovering these cards are more beneficial to the companies than to them. Oftentimes these zero percent credit cards are offered to consumers when making large purchases, especially with the company offering “0% interest” during the initial period.

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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