By Paula Ebben, WBZ-TVBy Paula Ebben

BOSTON (CBS) – It sounds like a win-win. Buy a new TV, a couch or a mattress and pay no interest for an entire year. We see and hear advertisements for 0% deals all the time, but they are not always as simple as they sound.

Justin Miller found that out the hard way when he bought his new mattress set. “The bed is great. We love the bed,” he said. But it was expensive. To make the $5,600 price tag a bit easier to swallow, he took the store up on an offer to finance it, interest free for a year through Citibank. “It sounded good,” he said. Or so he thought. After making his final payment, he was shocked when Citibank sent him a bill for $1332, a years worth of interest at a whopping 25%. “I thought this is crazy,” Miller said. “Either this is some kind of joke or some kind of scam,” he said.

WBZ-TV‘s Paula Ebben reports.

They are called deferred interest offers and according to Chi Chi Wu of the National Consumer Law Center, they are not always a good deal for consumers. “0% isn’t really 0%,” she said. “It’s 0% with a big catch.”

Here’s the catch. Miller’s one year interest free deal expired on December 2nd; it says so in tiny print on his monthly statement. But his final payment due date was not until December 7th, five days after the interest-free period expired.

Miller is convinced it is an intention trap to force consumers to pay more money. Wu agrees that it’s a questionable practice. “We think the entire structure of these deferred plans is deceptive,” she said. “I think they are actually the single biggest trap left after the credit card act,” she said.

According to Wu, federal regulators actually banned these deals but later reversed that decision. She speculates the move came because of objections from the retail industry. “These 0% financing plans are a way for retailers to sell those big ticket items and without them, the retailers were afraid they wouldn’t sell as many TVs, carpeting and mattresses,” she said.

Citibank refused to discuss the specifics of Miller’s case and said the terms are clearly laid out in the contract. Miller doesn’t think so. “I’m never going to do business with Citibank again,” he said.

Miller took his story to Facebook and managed to convince Citibank to refund the interest, but there is no guarantee that would work for everyone.

According to Wu, your best bet is to make your last payment a full month before the end of the interest free period or pay with a conventional credit card with a competitive interest rate.

Comments (11)
  1. Papa_Barry says:

    Well DUH. His sales receipt also showed the expiration date also.
    I always use 0% interest deals and haven’t been caught yet. Why? because I calculate the 6mo, year or 18 mo time frame from the date of purchase and figure my payments to clear the balance 1 month before the expiration.
    People, these zero interest (or same as cash) deals are great. Just be smart. If they give you 1 year to pay figure your monthly payments on 11 months, etc.
    The problem isn’t with the stores it’s with the consumers and their own stupidity

  2. Papa_Barry says:

    I forgot to add in my original comment.
    ONLY buy what you can afford to payoff in the allotted time frame and NEVER EVER just send a minimum payment. As I mentioned calculate your payment according to the purchase price (plus tax) divided by the number of months allowed minus 1.
    you buy something for 5,600 (as mr Miller did) and get 1 year at 0% you should be sending the company $509.10 a month. $5,600/11 months = $509.090909 or $509.10
    the article is payed off 11 months from the day you buy it and you get the zero interest.

  3. RERN says:

    First $5600. for a mattress????? That was the first dumb move. Second, like Papa said, you have to be smart and read all the fine print!

  4. Cynic says:

    It used to be called “Loan Sharking”…Now it’s called “Good Business”. The Mafia was way ahead of the Curve on this one.

  5. Buddy says:

    Well Papa we all can’t be as bright and brilliant as you. Your wonderful, or at least your telling us all that you are. When I grow up I want to be like you, you ignoramous!

    Rern, I agree $5600 for a mattress! If he can afford that then he can afford the interest!

  6. Nab71 says:

    Papa_Barry, you’re right. The key is don’t push things to the limit If you have to stretch the payments for anything to the last minute you really can’t afford it in the first place. Leave room for mistakes or problems. Its similar to complaints about overdraft fees. If you watch your accounts and leave a cushion you won’t overdraw. Whether its for a mattress or a mortgage if you have to push to the limit, don’t buy it. Government and people need to control their finances.

    1. Papa_Barry says:

      Very well said.

  7. Cynic says:

    Every time you finance anything you reduce your income by 25%.

  8. Denise says:

    I love the “to good to be true” schemes ~ they wouldn’t keep using them if they didn’t work! Unfortunately people don’t learn. They live beyond their means and w/ the way the economy is these days – just being able to buy 2 ply toilet paper is going to be a luxury soon! Don’t buy anything you can’t pay off! Borrow against your 401k or something where you pay yourself the crazy interest rates vs’s someone else. Don’t give your $$ away just because! I just helped my Aunt get back on her feet – by June she should be debt free! But she was giving away $400 a month in interest vs the 3.00 she was getting from her savings account. People… use your heads!

  9. jim says:

    This story isn’t about stores/banks offering shady deals. It’s about consumers who are too dumb to be allowed to own and use credit cards. I’m sorry, but these no interest deals are a great way to buy big ticket items and, at Best Buy at least, they’re not that hard to understand. In the past year I’ve purchased a plasma tv and a new laptop this way and I didn’t pay one cent in interest. There are many practices of banks and stores that deserve scrutiny and criticism, but making noise over something like this just buries the real problems. As a consumer each of us has a responsibility to use our own brains once in a while. If this guy had done that he wouldn’t have gotten slapped with the extra fees.

  10. Cynic says:

    It’s an old book but if you can get a copy of it it is well worth reading… The name of it is “The Hidden Persuaders”… In the meantime it is best to assume that if it is an ad,It is a LIE. You’ll never go wrong.

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