Q: I charged a $1,200 tire + auto maintenance purchase to their credit card because it gave no interest for 6 months. But then today I got my first bill after that (for the 7th month) and my bill just went up almost $150 because of new interest charges! What the heck?!
A: You need to be careful with the Plaza Tire credit card because it does not give you true 0% interest.
Instead, how it works is they give you deferred interest for 6 months.
In order to actually get “no interest” like they say, the entire amount needs to be paid back within the 6 month window. Unfortunately if you’re only making the minimum payments, that won’t happen.
If you still owe something – anything – when the 6 months is up, then they tack on the interest charges going back retroactively for the full 6 months.
This explains why your bill could unexpectedly go up between the 6 and 7 month.
How to beat them at their own game
If you want to use their credit card to take advantage of the “no interest” offer, then the key is to either (a) pay off before the 6 months, or (b) transfer the balance before the 6 months is up.
If you are carrying any type of balance on their card right now then you should try and transfer it before you get hit with the retroactive interest. Or even if you already have been hit, you should still transfer the balance because the 22.8% APR that Plaza Tire charges is too high. Your payments will be lower under a real 0% plan that doesn’t charge retroactive interest.
See if you can do better by trying for the following offer. It’s worth a shot since I hear from many people with just average credit scores who have been approved for it.I’m not just beating up on Plaza Tire Service, because the truth is most store cards work like this. In fact the issuer of their card – Credit First National Association – also manages credit cards for several other auto repair and tire stores… and all of them work the same way, to the best of my knowledge.
Simply put, it’s best to stay away from these types of “deals” if you can qualify for a better credit card instead with zero interest. Of course, I know that’s easier said than done, since banks are so strict these days with approving people.
This article was written or last updated June 6, 2013