Be careful of hidden interest rates
Be careful before taking out store credit cards
When you are at the checkout register of your favorite retail store, it might sound like a bargain to save big on the purchase you are making that day, but be careful of potential pitfalls with this kind of credit.
To entice consumers to sign up for in-store credit, consumers are offered an upfront discount plus 0% financing or cash back on purchases. But these offers also come with clauses about retroactive interest or extremely high interest rates at the end of a predefined period.
If you have the ability to pay for your purchases in full each month, then a store credit card might be a way to save some money in the short-term. However, if you are not then you could end of owing large amounts of interest as well as fees for your purchase price because special interest rates often have a term limit.
For example, in-store cards usually offer 0% financing for a period of time such as 6, 12 or 18 months. But here’s the catch, if you aren’t able to pay off the charge in the allotted time period, you will be charged interest back to your original purchase date. The interest rates vary but are usually between the range of 15% and 26.99%.
In the past, it might have made sense to take advantage of a 0% borrowing rate because the consumer could have put the money to better use by putting it into savings that paid interest or short-term investments. However, with interest rates on savings accounts near 0% currently, this isn’t much of an incentive to take on this higher level of possible risk.
On the other hand if you are the type of consumer who is carrying no debt and have the cash on hand to pay for your in-store credit purchase, it is possible that you could sign up for a deal, receive a large discount and then pay off the debt before any interest is due. If a company is offering a consistent cash back that might make sense for you to consider this type of arrangement since you could continue to get a benefit for your purchases at a retailer who offers it.
Bottom line: Before taking on this risk, be honest about your need for your purchase and your ability to repay the loan prior to the end of the promotional phase.
• • •
New twist on the Microsoft scam
By now most consumers have learned that Microsoft does not call to let us know that our operating system on our computer goes bad or is in need of repair. So now, scammers have devised a new sneaky way to get consumers to call them back in order to get their personal and credit card information as reported by some local Coeur d’Alene readers.
Turns out scam artists are calling consumers and informing them that they work for Microsoft and are going to update the users anti-virus software and then charge the customer’s account $399 for the software within 24 hours of the call unless the customer calls to cancel the order.
The readers didn’t order this software and in one case the reader didn’t even own a computer so he certainly didn’t need the anti-virus software Microsoft was supposedly peddling. The problem is it isn’t Microsoft calling the consumers, it is scammers who are calling the consumers in order to get them to divulge their credit card information. When consumers hear that their account is going to be charged, they assume it is their credit or debit card which plays right into the scammer’s game. So when the scammer asks for the card information in order to process a credit, consumers readily supply this information to the con artist.
If you get one of these calls and didn’t order anti-virus software, do not return the phone call. Also, check your credit card and bank statements for suspicious charges and contest any unauthorized charges directly with your credit card company or bank.
• • •
Robocalls are reportedly down
There is some good news revealed in a new report from the FTC (Federal Trade Commission) that reported people are reporting fewer robocalls. The report shows that complaints were down 68% in April 2020 compared to April 2019 and down 60% in May 2020 compared to May 2019. The numbers for robocall complaints reported in April and May were the lowest the FTC has seen since August 2011.
The FTC credits the reduced calls on warning letters sent out by the FTC and the FCC (Federal Communications Commission) that were sent out in April and in May to companies providing VoIP service that apparently routed or transmitted illegal Coronavirus scam robocalls.
The FTC says it will continue to work with state and federal law enforcement partners, to reduce these unwanted calls. Phone companies and apps that screen robocalls seem to also be helping reduce the number of calls. If you get a robocall, hang up and report it to the FTC at www.donotcall.gov. If you want to learn more about what else you can do to stop these pesky calls go to the Federal Trade Commission’s website at www.ftc.gov/calls.
• • •
Remember: I’m on your side.
If you have encountered a consumer issue that you have questions about or think our readers should know about, please send me an email at terridickersonadvocate@gmail.com or call me at (208) 274-4458. As The CDA Press Consumer Gal, I’m here to help. I’m a copywriter working with businesses on marketing strategy, a columnist, a Veteran’s advocate assistant and a consumer advocate living in Coeur d’Alene.