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Get the FACTS about Credit Cards...

Here is what you need to know...
   to break free of Credit Card Karma:

Credit Card Traps...
"No Money Down,
   No Payments and No Interest for a Year"

To understand what a credit card trap the urban legend of "no money down, no payments and no interest for a year" really is... you need to understand just how this practice does not necessarily pay - you!

* How These Offers Work

"No money down, no payments and no interest for a year?" This sounds like such a good deal (for you) that you might not question how a merchant or the credit card company can make any money offering it. After all, these are businesses are not charitable organizations. The truth is charity is not involved... here is why:

* When These Deals are Offered:

If you notice, they are only offered on "durable goods" that can be installed into homes. These include: carpets, tile, appliances, cabinets, countertops, and so forth. These are all items that increase the value of your real estate and so that the merchant can establish a financial lien against your home.

* Why These Deals are Offered:

Money is the reason. These merchants are counting on the fact that - in a year - people will have forgotten about the debt. They will remember when they get a bill for the full amount plus 30-50% interest charges. If you cannot pay, then they will get the money from the sale of your home.

* What Really Happens:

If they cannot pay it off immediately, people believe that "I have a whole year to save up for the whatever" they bought. If they do have the money, they will want to leave it in the bank where it can earn some interest. Regardless of that, a year later, they will find out "what really happens!"

* How Dirty Tricks are Played:

Here are some games merchants play during these offers. All these games revolve around this central fact:

When you are PAST DUE, the 30-50% interest charges kick in hard because you were too late! On these deals, when you are late, you do NOT pay for a few days of prorated interest but you DO have to pay the entire 30-50% of interest charges. This great deal really sucks!

So When is it Due?

Is it due a year from the date you purchased the item -or- the date it was delivered -or- the date the contract (if you signed one)? Be sure to get a clear answer because if it was due a year from when you purchased it but you paid on the anniversary of delivery days later... you are PAST due.

So Where Do I Send the Payment?

If you send the payment to the address on the contract but their offices have "moved", did you know that payment is not received unless it went to the right place? Did you forget to remind the merchant to send you payment instructions but now... you are PAST due.

So What Did the Contract Say?

- Did you even get a written contract in the first place?
- Did you just sign the sales receipt with a cryptic note that you will pay next year?
- Did you even realize that the interest on your purchase began accumulating from the moment you bought it?
- Did you know it was only cancelled if you paid the principal during the year?
- Did you even know that the annual percentage rate of interest (APR) would be somewhere in the 30-50% range... before you became PAST due.

* What Should the Contract Say?

Most of them will have a clause like: "No interest and no payments for 12 months. Interest accrues from date of purchase but is waived if the price is paid in full within the promotional period."

What is important is the LAW in your state: specific information about due dates, interest rates, and the actual dollar amounts of the cost of borrowing must be disclosed at the time of purchase. If that information is not disclosed, merchants can incur fines and penalties (if you report them to your state banking commission).

The Moral of This "No Money Down, No Payments and No Interest for a Year" Story: "Most people do not read the fine print and merchants take advantage of it!" So before you go for that great deal make sure that you are clear on its terms and conditions. If the deal seems too good to be true... then it is!