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Beware those tempting 'no interest for 12 months' offers, experts say

That seemingly sweet offer won't be so sweet if you don't pay off the entire balance before the promotional period ends, warns the National Consumer Law Center.

Jacob Dayan, CEO of FinancePal, a Chicago firm

Jacob Dayan, CEO of FinancePal, a Chicago firm that offers financial services to companies, warns, "Often the monthly minimum payments on deferred payments are set low enough that it won't pay off the balance during the promotional period." Photo Credit: Getty Images/iStock/Gearstd

Retailers go hard to get you to dig deeper into your pocket at this time of year. Expect to see those "no interest for 12 months" credit card deals dangled this season along with jingle bells.

For sure it’s tempting, just like holiday goodies you can’t seem to stop gobbling. Think twice. The National Consumer Law Center in Washington, D.C., warns shoppers about the “debt trap.” That seemingly sweet offer won’t be so sweet if you don’t pay off the entire balance before the promotional period ends.

According to the NCLC, say you buy a $2,500 laptop on Nov. 23, 2018, using a one-year, 24 percent deferred interest plan, and pay off all but $100 by Nov. 23, 2019. The lender will add nearly $400 in interest to your next bill — that's interest on the entire $2,500 dating back one year.

Here are two more reasons to just say no.

The clock ticks immediately: Interest accrues from day one. It’s waived if the balance is paid in full by the agreed upon end-date. “If you miss a payment, the balance isn't paid in full by the end-date or you are a single day late on a single payment, the interest from day one is instantly tacked on and voids the zero percent interest offer,” says RJ Mansfield, author of "Debt Assassin: A Black Ops Guide to Cleaning Up Your Credit."

Watch out for low minimum monthly payments: Jacob Dayan, CEO of FinancePal, a Chicago firm that offers financial services to companies,  warns, “Often the monthly minimum payments on deferred payments are set low enough that it won’t pay off the balance during the promotional period.”

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