WASHINGTON (9/4/14)--Credit card companies have been warned against deceptively marketing interest rate promotions, the Consumer Financial Protection Bureau (CFPB) announced Wednesday.
According to the bureau, it is concerned that companies are luring in customers by promising low--even zero--interest, then hitting them with surprise interest charges.
A CFPB bulletin highlights concerns with marketing of credit card interest rate offers such as balance transfers, deferred-interest offers and convenience checks. Under these promotions, consumers may be charged a fee to transfer a balance or make a purchase with their credit card in order to receive a promotional interest rate on that amount for a set period of time.
While consumers pay no interest or a low interest rate for balances subject to the promotion, additional purchases made with the credit card may incur interest charges right away.
The bureau believes some marketing materials do not clearly disclose that consumers must pay off the promotional balance by their due date to avoid unexpected interest charges on routine purchases for which they were not charged interest previously.
For some consumers, these surprise charges can make the cost of transferring a balance more expensive than revolving the same balance on their existing card.
According to the bureau, these marketing tactics specifically impact consumers who enjoy an interest-free "grace period" on credit card purchases. Consumers who pay off their total credit card balance each month receive a grace period during which they do not have to pay interest on purchases.
The CFPB has also published consumer tips about credit card interest-rate promotions and how grace periods work.
Use the resource links below for more information.