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"Store credit" can lead to further credit card debt

It is tempting around the holidays to consider credit a viable option to pay for large-ticket gifts, especially when a retailer offers store credit or even branded credit cards with low-to-no interest rates for a set time. However, South Carolina residents should be warned that not all is as it seems with some of these deals. Credit card debt is a serious issue and is best approached with a degree of caution. 

So-called zero-percent financing cards are commonly advertised at this time of year. Often the card will boast no interest for a given period of time, usually six months to a year. While this sounds promising on paper, quite often these cards are not as devoid of interest payments as they appear to be.

Of the retailers recently polled, almost 70 percent offer these sorts of financial incentives, but of those, nearly half employ what is called "deferred interest" plans. This means that interest accrues as normal, but the individual is not billed that interest monthly -- instead, it builds behind the scenes with each month the balance remains on the card. This can result in a potentially crippling lump sum interest balance at the end of the so-called "free" period, which can lead to damaged credit or worse. 

South Carolina residents do not need to be reminded of the potential pitfalls associated with credit card debt. Foreknowledge is the best way to guard against potential issues like the one tackled above. And for those who face serious debt with no seeming way out, multiple options exist to support those individuals, including refinancing, debt consolidation and bankruptcy protection. 

Source: Time, "Don't Get Suckered into Signing Up for a Store Credit Card this Holiday", Jackie Zimmermann, Nov. 24, 2014

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