According to the CardHub 2015 Deferred Interest Study, almost half of U.S. retailers are looking to take advantage of American consumers by offering rip-off financing plans for their holiday purchases.

One of the most common ways retailers try to rip off consumers is with scammish financing plans that have huge penalties if you are late on a single payment by as little as one cent.

Alina Comoreanu of Card Hub explains how these rip-off financing plans work: “Deferred interest financing is like a wolf in a sheep’s clothing, pairing an enticing offer for something along the lines of “0% interest for 12 months” or “special financing” with a clause that allows finance charges to retroactively apply to your entire original purchase amount if you make a late payment or leave even the tiniest of unpaid balances when the introductory deal ends.”

Firms offering rip-off financing in 2015 holiday season

Rip-Off Financing

The list of U.S. retailers that are offering rip-off deferred financing includes:

  • Dell
  • J C Penney
  • Menards
  • Sears
  • Office Depot
  • Office Max
  • The Home Depot
  • Lowe’s
  • Best Buy
  • Walmart
  • Staples
  • Amazon.com
  • Toys R Us
  • Macy’s
  • True Value

 Rip-Off Financing

More on deferred interest financing

The CardHub report highlights that 73% of major retailers are offering a financing option this holiday season. Among the major retailers that do offer financing, 47% currently offer a “rip-off” deferred interest plan.

Not surprisingly, quite a number of big-name retailers (Apple, Macy’s and TrueValue, for example) are among the least transparent about their deferred interest financing options.

Rip-Off Financing

The good news is that disclosures about rip-off financing options are improving. Comoreanu points out that the average CardHub Transparency Score has moved up from 6.9 in 2013 to 7.8 in 2015. True Value, however, remains at the bottom of the list with a transparency ranking of 4.

Of interest, almost 35% of deferred interest credit cards are issued by Citi and another 29% are issued by Synchrony Bank.

 Rip-Off Financing

Several retailers that do not have a deferred interest plan do allow consumers to make payments through PayPal, where the “Bill Me Later” option is a deferred interest financing.

Finally, keep in mind that 29% of the retailers that offer deferred interest also offer consumers an alternative so they can receive a “first-purchase discount” instead of special financing. The average “first-purchase discount” among these retailers is a substantial 16%.