Money Fix: Deferred-interest credit cards

Credit cards get costly when you don't pay your balance in full and pay interest. So it's easy to see the temptation of deferred-interest credit cards offered by national retailers like The Home Depot, Best Buy and others. Buy now and pay no interest -- typically for 12 to 18 months. The trouble is, it can be a trap.

Good intentions gone bad: "The card can be used for emergencies or important purchases that you can't afford at the moment, and you avoid the interest rates on minimum payments that traditional cards charge," points out Howard Dvorkin, founder of ConsolidatedCredit.org. But you only come out ahead if you can pay off your entire balance within the introductory rate period. Most people plan to, but life happens.

Gotcha: "The big caveat with all deferred-interest plans is that if you are even one day late in paying your balance in full, you incur interest on the entire balance, retroactive to the date of purchase," says Ben Woosley, director of marketing and consumer research for CreditCards.com.

You could end up paying interest rates from 20 to 30 percent. Read the fine print, because some deferred-interest credit card agreements don't clearly establish when and how interest rates apply, warns Dvorkin.

Simply put, "Buyer beware," says Leslie Tayne, a Melville attorney specializing in debt issues. "Deferred-interest cards are a way to incentivize and lure you into taking on cards that will eventually have a higher rate of interest than other cards once the intro rate expires."