Here in So. Cal I have a lot of friends who work in the music industry. Recently I was with one of them at the Guitar Center Hollywood location (which as you can imagine, has a very sweet selection… guitars that cost as much as a Porsche!). Now my friend was eyeing a more reasonably priced one that was “only” around $4,000. She could have paid in full, but the Guitar Center credit card promotion sparked her interest…
Quick Summary: You need to be careful about the Guitar Center card because, like many store cards, it charges retroactive interest if you don’t pay it off in full within the 0% window. You would be better off with a card that doesn’t do that.
Here’s the promo the Guitar Center card was offering when I was at their store with my friend:
- Promotion was valid for purchases “on over 100 participating manufacturers”
- No interest if paid in full within 1 year (the duration you are offered may vary — online they advertise plan durations of six months, one year, 15 months, 18 months and 24 months)
My friend heard that and said “No interest for 1 year? I can’t go wrong with that.” Well, actually you can… because it’s not necessarily an interest-free credit card. Here’s why…
How the Guitar Center credit card’s “no interest” offer really works
With general use credit cards (like a Visa or MasterCard from an issuing financial institution like Bank of America or Wells Fargo) if they advertise 0% on purchases for 12 months, that is exactly what you get. You won’t have any interest during that time (unless you start making multiple late payments, but that’s another topic). Unfortunately, the Guitar Center Preferred Player credit card works differently…
In the fine print, this is what it says word for word (I’m copying it directly from the website):
“No interest charges on the promotional item(s) if paid in full within the specified plan duration. If the balance attributable to the promotional item(s) is not paid in full in the specified plan duration, interest charges will be imposed from the date of purchase.”
So if you can’t pay off every single dollar before the promotional period is up, you will be slapped with interest going back all the way to the date of purchase. In other words, you’ll have to pay all the interest payments you *would* have been charged if you’d never gotten the 0 percent deal.
When you consider that the Guitar Center credit card has a VERY high APR (22.9% at time of writing), you could end up paying a LOT of interest on your purchase. Especially if you’re buying something as expensive as the guitar my friend was looking at. The Guitar Center’s card requires monthly minimum payments of 3 percent of the remaining balance. If my friend were to have made only the minimum payments over a year (which, of course, would mean that the balance would not have been paid off at the end of the 0 percent period), she’d have gotten hit with retroactive interest charges of more than $800.
What should you do?
After reading this credit card review, you might have came to the same conclusion as my friend did… she took a pass on applying.
If you absolutely know that you’ll be able to pay off the balance in full before the end of the promotional period however, this card may be a good financing tool. Still, if you have decent credit, I personally would avoid the Guitar Center card. At any given time there are plenty of zero interest credit card offers out there that give 0% on purchases with no threat of retroactive interest. While a year or more may seem like plenty of time to pay off a large purchase, life can disrupt your best-laid plans. And a credit card that won’t ever charge back interest seems like a much safer way to go.
Review last updated February 2016