Month: May 2019

We’ve all heard it before when checking out at a retail store. Chances are, you’ll be hearing it a lot more over the holidays as you ramp up your holiday shopping.

It can be tempting — you can make a large purchase today, and pay it off over time interest-free. Some companies will even throw in a gift card or a discount if you apply for their credit card. But before you say “yes” to the cashier, there’s one hidden trick that these companies often use. If you’re not aware of it, your “free financing” might end up backfiring in a big way. (See also: Should You Sign Up for That Store Credit Card?)

What is a “deferred interest” credit card?

There are two types of credit cards that offer free financing: 0% Intro APR cards, and deferred interest cards.

You see ads for 0% APR cards all the time — you get 0% APR for a limited time. After that, the standard interest rate goes into effect. When stores offer a “deferred interest credit card” you might reasonably assume they work the same way. But they are very different.

With a deferred interest card, you must pay off the charge in full before the promotional free financing period is over. If you don’t, you’ll have to pay the full amount of interest charges, as if that interest rate was in effect the whole time. All that “deferred” interest comes rolling back the moment the promotional period is over, not just on the balance you have left, but on the entire purchase amount.

And it’ll be a heck of a bill too: the interest rates on these types of credit cards are often sky-high, running upward of 25% APR. As a comparison, the current average interest rate for all credit cards combined is 13.08% APR, according to the Federal Reserve.

Let’s look at an example of how much a deferred interest credit card might cost you. A store credit card offers 12 months deferred interest financing, with a standard 27.99% APR. If you make a $1,500 purchase and only make the minimum payments during those 12 months (about $45), you’ll owe a walloping $321.63 in interest at the end of it — and still owe over $950 on your purchase.

How do you spot a deferred interest credit card?

Your first clue is who is offering the card. Most deferred interest credit cards are offered by retail stores. If a store employee is trying to get you to sign up for the card, ask them: “what happens if I don’t have the purchase paid off by the end of the financing period?”

But the best way to find out if the card you’re interested in really is a deferred interest card or not is to simply look at the Terms and Conditions disclosure. Here’s a snippet from a store credit card’s disclosure to give you an idea of what the language will look like:

“If the balance is not paid in full by the end of the promotional period, interest charges will be imposed from the purchase date at the purchase rate on your account which is 26.24%.”

See how the charges are imposed “from the purchase date?” Other words to look for are “deferred” or “financing” or “no interest if paid off in X months” which is different from just 0% APR during the promotional time. A credit card that offers 0% APR for 12 months mean that there are no interest charges on your balance for 12 months, then at the end of the 12 months, the standard APR will start, and will only be applied to the currentbalance, not the entire purchase. (See also: Same-As-Cash Store Offers vs. 0% Intro APR Credit Cards — Which Is Right for You?)

Come up with a game plan to tackle your debt

Despite all of this, deferred interest cards aren’t necessarily something you always need to avoid. In fact, they can really help you out — as long as you have a game plan to deal with them.

Setting up a plan is simple. All you have to do is take the amount of your purchase and divide it by however many months you have to pay off the charge. If you want to play it on the safe side, you can even subtract a month or two to give yourself some space if something comes up. That way, you’ll have it paid off with plenty of time to spare.

Here’s an example. Say your child’s old computer died, and you want to buy them a new $1,100 computer for Christmas. Luckily, your local electronic store chain offers a 12-month deferred interest credit card, which you use to purchase your new computer.

If you want to have it paid off early, divide the purchase price ($1,100) by 11 months, to give you a monthly payment of $100. You can further boost your chances of having it paid off by setting up that payment on autopay, so then you don’t even have to worry at all about making payments. (See also: The Best Store Credit Cards)

When you should choose a store credit card over a 0% APR card

A 0% APR credit card will give you the safety net in case you don’t actually pay off the entire balance within the promotional time frame. Even if you leave a $10 balance on a store credit card, you’ll get charged all the interest from the purchase date. It’s pretty brutal.

It can also be of use to you even after the promotional period. Perhaps it’s a very good travel rewards credit card that can fund your next vacation.

But there are times you might end up choosing the store credit card instead.

You have bad credit

I won’t remind you that if you’re in this position, you should be considering ways to build back your credit which doesn’t include adding more debt. But assuming you’ve already thought this through, getting approved for a 0% APR card might not be in your cards. So if you really need this buffer to pay off the purchase, and you are committed to the payoff goal, then go ahead and sign up for the card. Store cards generally have a lower threshold for approving customers, because their regular APR is so high, and their credit limits usually low.

You will benefit from the rewards

Stores can be generous to their credit card holders, offering big rewards and discounts that will save you loads of money. If you’re a frequent shopper there, and the store card can offer you much better deals and rewards than you’d get from a typical cash back card, for example, then it can be worth it to be a loyal card holder. Just don’t ever leave a balance because the APR will always destroy any savings or rewards the card would have offered.

If you’re considering adopting a location-independent lifestyle, or you’re already a digital nomad, your electronic devices are critical to you being able to work while you travel. Making sure you’ve got a strong internet connection and plenty of power can be challenging on the road. Without those, your productivity will suffer, which could cost you big bucks. Here are four tech add-ons to stock up on before your next trip that can save you both time and money.

Wi-Fi range extender

If you’re working while traveling, you probably spend a significant amount of time holed up in your hotel room, hunched over your laptop. Or if you’re taking a well-earned vacation, you might choose to relax by streaming a movie or listening to some music. The problem comes when you find yourself confined to a room that’s far from the router with a patchy signal. The speed can slow so much that it feels like you’ve gone back to the days of dial up.

Luckily, there are devices that allow you to seamlessly connect as if the router was right next to you. Wi-Fi range extenders increase the coverage areas and boost the strength of slow connections in areas farther from the router. All you need is the network’s password, and to be at least on the edge of the signal to set it up. Most hotels offer free Wi-Fi to their guests (or for a small fee), so you should have no problem getting their network password. Vacation rentals will most likely include this for you to use, as well.

There are two main kinds of Wi-Fi range extenders available. One plugs into a wall socket and picks up the signal from the router by amplifying it and then transmitting it again. This allows anyone with the password to access the extended network, so it’s the preferred kind to use if you have multiple devices, or if there is more than one person who needs to use the Wi-Fi connection. However, it does mean that you need access to a wall socket, which may be difficult depending on where you are.

The second type is a mini antenna that plugs directly into the USB port of your laptop. It will pick up a weak signal and turn it into a strong, consistent connection. The benefit of this model of Wi-Fi extender is that you don’t need a wall socket to use it — making it more convenient when there isn’t one available. However, it will only work for the device it’s plugged into, and many models only connect to laptops, meaning your phone or tablet will still be out of commission. (See also: 6 Ways to Slash the Cost of Wi-Fi When You Travel)

Portable charger

When you’re in a foreign country, you tend to rely on your gadgets even more heavily than when you’re at home. Smartphones have become indispensable traveling tools that enable you to do anything from booking accommodation and searching for directions, to downloading your boarding pass or ordering an Uber.

But, virtually all of your entertainment devices require a charged battery to function. Whether it’s an e-reader, a tablet, a camera, or a Bluetooth speaker, they all need to be juiced up to be of use while you’re on the go.

A portable charger, also known as a power bank, can help you avoid a dead battery while you’re out and about. You can charge your devices on the go, instead of needing to be chained to a wall socket while waiting for your devices to charge.

Power banks come in all shapes and sizes, and hold varying amounts of power. Tiny, lipstick-sized power banks will fit in your pocket, while the highest capacity models are understandably more bulky, but can power anything up to the size of a laptop. You can even get solar powered power banks, which will convert the sun’s rays into battery juice.

Portable Wi-Fi router

If you’re a frequent traveler who is constantly connected to the internet, then a portable Wi-Fi router may be a good investment. Essentially, it’s a router that works like any other, allowing you to wirelessly connect multiple devices at the same time. The difference is that a travel router accesses the internet through a tethered cellphone, using a sim card and USB cord. You can create your very own private Wi-Fi network anywhere there’s cellular coverage, whether you’re on the beach or lounging by the pool.